Competition is set to intensify in the Indian upstream oil and gas industry, with a big player like Vedanta Resources entering the sector. Private players such as Reliance, Essar and oil PSUs like ONGC and OIL might feel the heat. As a new entrant, Vedanta would like to expand its oil and gas portfolio. It is expected to participate aggressively in future bidding rounds for allocation of oil and gas acreages. This could lead to a broadening of competition for offered acreages.
India is increasingly meeting its primary energy requirement through imports as the domestic production is unable to keep pace with demand growth. The government has no option but to intensify its focus on domestic exploration. Big discoveries by private players like RIL and Cairn India in recent years have helped boost domestic production of oil and gas. While OIL is a relatively small company, ONGC has the size to make a difference. However, it has failed to make another world-class discovery after the Mumbai High. It is struggling to increase its production.
As a result, the government is increasingly banking on the private sector to expedite exploration programme in the oil and gas sector. These oil PSUs might see their strategic significance decline further in India?s oil and gas exploration sector if they fail to improve their operational efficiency.