Due to its rapid growth, the industry had a lot of opportunities for investments from foreign players. Petroleum gases, propane, distilled crude oil and kerosene were some of the major products manufactured for foreign trade. Petroleum products accounted for the highest share in Indian exports in 2019, at 14 percent. Export volume of the products was estimated to be around 67 million metric tons. Oil and Natural Gas Commission (commonly known as ONGC) was the largest crude oil and natural gas company in the country. Contributing to almost 70 percent of India’s domestic production, it was the only Indian public sector company to secure a spot in Fortune’s ‘Most admired energy companies’ list. Indian Oil Corporation on the other hand, was the largest commercial oil company in India. With over 47 thousand customer touchpoints, the company was the largest contributor to the national exchequer through duties and taxes.
Despite the industry starting its journey as a completely government run unit, privatization was presumably inevitable. The amount of investments required for further development had gone beyond the scope of even the biggest state-owned firms such as ONGC and Indian Oil Corporation. The lapse in investments further pushed the privatization process, with Bharat Petroleum most likely to be affected in fiscal year 2020. The Indian government aimed to sell its 53.3 percent state in BPCL to attract foreign investments and fully privatize the oil and gas company.
Investments and privatization in the petroleum sector became necessary owing to the country’s tremendous energy consumption. The annual growth in the energy consumption across the nation was about eight percent in 2018. Even though there had been considerable efforts to switch to renewable energy, coal and oil were the main sources of fuel for the past few years. Relying heavily on energy imports, India became the largest importer of liquified natural gas in the recent years.
However, the Indian government took initiatives to change the trends in energy consumption. As the global oil demand was estimated to peak in 2020 and then follow a downward spiral, India declared that it would allow the manufacturing of only electric cars by 2030. Going forward, gas sector was expected to emerge as the dominant fast-growing fuel for the country. With almost stagnant domestic oil production and increasing imports, gas was anticipated to fuel the robust economic growth in the country.