Strategies for the Indian oil and gas sector

Abstract

There has been a great deal of talk in media and political circles about India’s oil and gas strategy in the liberalized economy. It has become increasing evident that to sustain India’s ambitious growth rates it will be imperative to secure supplies for the countries every growing thirst for oil. The importance of the matter was highlighted in the recent President’s address to the nation on 15th August, where he stressed the need for India to up its production of petroleum and for the country of look for alternate sources of fuel. This paper studies the strategies available to the Indian Oil and Gas sector to secure the countries oil future – in fact, it looks beyond just oil and evaluates the strategies the various agencies in the country must play to ensure that India’s energy needs in the future are met. Unfortunately, a great deal of attention in the current times has been paid to the petroleum sector and more specifically, India’s competition with China in acquiring oil rights across the world. This narrow focus is a result of the manner in which energy planning is done within our country and, more often than not, has lead to an incoherent energy strategy within the various arms of government that plan India’s energy infrastructure. The thrust of India’s oil strategy since Mr. Mani Shankar Aiyer has taken office as the Petroleum minister for the country has revolved around two major points; firstly, merging the Indian upstream and downstream firms into a giant oil major, so as to have the muscle to compete successfully against foreign oil firms in the domestic and foreign markets; secondly, to actively pursue oil equity abroad through this Indian oil giant.In this paper we examine these strategies and conclude that the planned merger will not be the most efficient way to achieve the desired results. In fact in the interest of operational efficiencies it is best to keep the companies as they are structured today. Oil strategy and at a more basic level, the energy policies of the country should be decided by a central apex body. The oil firms and in a broader scenario, the other energy firms will be the execution arm of this apex body.Furthermore, the paper concludes that India is fighting a losing battle in the war for the world’s oil reserves. It needs to change its game plan and leverage its strategic position in the world map, namely at the centre of one of the world’s busiest maritime oil corridor – the Indian Ocean.