by R. Sasankan

Ah Love! Could thou and I with Fate conspire
To grasp this sorry Scheme of Things entire
Would not we shatter it to bits - and then
Re-mould it nearer to the Heart's Desire!

- Omar Khayyam in the Rubaiyat

Small may be beautiful but Big is brawny. India needs a big, brawling giant in its corner. And ONGC Videsh - the fully-owned overseas subsidiary of India's upstream major, Oil and Natural Gas Corporation (ONGC) - looks best suited to play that role. But before we get there, the big guns in the oil industry will first need to agree that there is a need for such a Goliath.

The way I see it, ONGC Videsh needs to be broken from within and re-moulded into a petroleum monolith that will be owned and operated by all the major players in the country's upstream, midstream and downstream sectors. The ONGC tag will have to go as we try and re-create this hulk.

ONGC Videsh was created in 1965. Going by Indian standards, it has been reasonably successful. The pity is that it hasn't been able to widen its patch. I have covered the petroleum sector since 1981 - and I have realised that every regime is happy with status quo. No one likes to rattle the cage. They recoil at the idea of creating an oil and gas giant that can take a tilt at Shell, Chevron or Exxon.

Indian politicians prefer to import crude because that is the easiest way to make money for everyone that matters. The story in the area of gas imports is even more horrendous; not only has it fostered a culture of massive kickbacks but it has also ratcheted up the price of locally-produced gas to the level of LNG prices.

This brings me to a paradox: the Indian economy has registered impressive growth over the years. But domestic crude oil production has been sliding over the past decade. Oil production fell from record 35.9 MT in FY15 to 29.4 MT in FY24. The decline in production continues in 2024. The E&P companies produced 14.4 million tonnes of crude oil during April to September, down from 14.7 million tonnes during the same period in the previous fiscal year. There was a marginal production decline in September as well. Domestic E&P companies are trying to do their best and, in the process, they have earned the dubious reputation for drilling the most dry holes in the world. As a result, India's crude import dependency is close to 87 per cent.

International oil companies are amazed by India and its bumbling adventurism - which prompts them to make periodic forecasts about India's surging demand for energy. India is the third largest consumer of crude oil in the world, after the United States and China. The estimated total consumption of crude oil in India rose from 204.12 MT in 2011-12 to 221.77 MT in 2020-21. India's oil demand is projected to increase rapidly in the coming years, driven by strong economic growth and growing urbanization. India, they say, is expected to lead global oil demand growth in 2024, surpassing China for the first time. India's oil consumption is forecast to rise to 7.2 million barrels per day (MBPD) in 2030. The IEA predicts that India will account for more than one-third of the projected global gains, reaching 6.6 MBPD by 2030.

How will India meet this rising demand for oil? The only way is to acquire oil and gas assets overseas. ONGC Videsh has been acquiring oil and gas assets. It holds stakes in 32 oil and gas projects in 15 countries. The number sounds impressive but, in reality, it does not matter much as the contribution in terms of crude oil is only marginal when considering the country's demand. It does not have the status of an operator of a field anywhere.

ONGC Videsh has pursued the now-discredited strategy prescribed by British economist E.F. Schumacher (1911-1977): Small is Beautiful. Consequently, it has acquired very small stakes in overseas projects that do not give it any say in running these assets. And therefore, no one sees it as a hulk that one needs to be a little wary of.

The corporate titan that I propose should enter the upstream oil and gas sector overseas on a scale that matches China. India's rising market demand can be met only if major oil and gas assets are acquired through a complete buyout or in the form of a controlling stake. The new company can start with ONGC Videsh's assets as a base.

The E&P operations of the new company should be handed over to the right people, cherry picked from ONGC and Oil India. The selection should not be on basis of the size of the company. Experts rate Oil India, though small in size, as a highly competent company in the oil and gas sector.

It is still not too late for India to shift to a Big is Bold strategy and snap up overseas oil and gas assets. Global demand for oil has weakened in recent months. This presents a wonderful opportunity that India ought not to pass up. After all, India has a long way to go before it attains the average global per capita consumption of oil and gas.