India’s Oil and Gas Industry has an interesting mix of Oil & Gas companies from the government and private sector.Except for some companies providing ancillary and drilling services,most of the companies are huge with billion dollar balance sheet and huge operations as is the case with the Oil and Gas Industry worldwide.Except for Reliance Industries,the upstream sector of oil and gas production and distribution is dominated by government owned companies which are heavily regulated.Despite attempts at liberalizing the APMC and the operations of the PSU Oil Companies,HPCL,BPCL and IOC run billions of dollars in losses as they are forced to sell oil and gas products at below their cost.The government’s policies are mostly ad-hoc compensating these companies through bonds and money transfers.It is quite strange as the minority investors are forced to pay for government subsidies for energy.India’s Oil Subsidies has led to the flourishing of a massive Oil Mafia which does not think twice before killing government officials and has led to poor outcomes for the country.Despite this government stupidity,some government companies like GAIL,OIL India and ONGC which operates in the production and have to bear less of the subsidy burden have grown and performed admirably.In the private sector companies like Reliance,Aban,Great Offshore,Essar have managed to grow rapidly as well with varying degrees of success.Here is the list of the major Oil and Gas Companies in India.
- Reliance Industries - The Flagship Company of the Ambanis and India’s largest Private Company Reliance Industries is also an Oil and Gas Giant .The Company has seen very sharp growth in the last decade and is diversifying into Retail.With a market cap exceeding $30 billion it is India’s most valued company.The company is also one of the biggest exporters in India with one of the largest petrochemical and oil refining complexes in the world at Jamnager.It recently sold a stake in its valuable Godavari Basin to BP for a whopping $7.5 billion.Extremely cash rich with a horde of more than $15 billion,it has started on empire building through ventures in Finance ( DE Shaw) ,Communications (buying of wirelss broadband spectrum),Shale Gas Buys in the USA,Hospitality (Buying up stakes in Hotel Companies).
- ONGC Corp – With a market cap of Rs. 235,000 crores ONGC ranks 3rd in Oil & Gas Exploration & Production (E&P) Industry globally .It cumulatively produced 803 Million Metric Tonnes of crude and 485 Billion Cubic Meters of Natural Gas from 111 fields. ONGC’s wholly-owned subsidiary ONGC Videsh Ltd. (OVL) is the biggest Indian multinational, with 40 Oil & Gas projects in 15 countries. The company earned a revenue of approx Rs. 20,000 crores with net profit margin of 34% in Dec’10.It holds largest share of hydrocarbon acreages in India & contributes over 79 per cent of Indian’s oil and gas production. Created a record of sorts by turning Mangalore Refinery and Petrochemicals Limited (MRPL) around from being a stretcher case at BIFR to the BSE Top 30, within a year.
- GAIL India – GAIL (India) Limited, is India’s flagship Natural Gas company, integrating all aspects of the Natural Gas value chain right from exploration to marketing.It emphasizes on clean fuel industrialization, creating a quadrilateral of green energy corridors that connect major consumption centers in India with major gas fields, LNG terminals and other cross border gas sourcing points. With a market cap Rs. 58,000 crores GAIL is expanding its business to become a player in the International Market. . The revenue earned was 24,000 crores (2009-10) with a net profit margin of 11%.The business has achieved laying of Natural Gas high pressure trunk pipeline, LPG Gas Processing Units & Transmission pipeline network, oil and gas Exploration blocks, OFC network offering highly dependable bandwith for telecom service providers etc. GAIL has been entrusted with the responsibility of reviving the LNG terminal at Dabhol as well as sourcing LNG.GAIL is one of the best performing stocks in the Energy Industry in India in the last couple of years.It is a well managed fast growing company in one of the best sectors in India with high competitive barriers.
- Cairn India - With a market cap Rs. 66,000 crores, Cairn India is now one of the biggest private exploration and production companies currently operating in the region. A subsidiary of the British company Cairn,its growth has been nothing short of phenomenal after winning a bid to explore oil blocs in Rajasthan in the NELP. Cairn India’s strategy is to establish commercial reserves from strategic positions in order to create and deliver shareholder value. The company operates the largest producing oil field in the Indian private sector and has pioneered the use of cutting-edge technology to extend production life. The company has set up a Processing terminal in Barmer (Rajasthan) to process the crude from fields. A pipeline has also been constructed to transport the crude from Barmer to Bhogat in the Gujarat coast. The pipeline section from Barmer to Salaya is operational and sales have commenced to Essar, RIL and IOC.Cairn India has recently agreed to be taken over by London listed India’s largest Mining Group Vedanta though the approval is still awaited from the government of India.It is the second largest Oil and Gas private company listed on the Indian stock exchange.
- BPCL – BPCL is alongiwth HPCL and IOCL, a major distributor of petroleum,cooking gas and diesel in the Indian market The company has a market capitalisation of Rs. 21,000 crores. on revenues of Rs. 36,000 crores with a net profit margin of 0.5%.The company’s low margins and abysmal stock price performance is due to the government control which forces it to sell at below cost leading to huge losses and curtails capex for growth.Despite noises of liberalization,nothing has come about with increased global crude prices increasing the losses greatly.Bharat Petroleum produces a diverse range of products, from petrochemicals and solvents to aircraft fuel and speciality lubricants and markets them to hundreds of industries and several international and domestic airlines.
- Indian Oil Corporation Ltd (IOCL) – The company covers the entire hydrocarbon value chain – from refining, pipeline transportation and marketing of petroleum products to exploration & production of crude oil & gas, marketing of natural gas, and petrochemicals. With a market capitalisation of Rs. 75,000 crores, it is in the Fortune ‘Global 500′ listing, ranked at the 125th position in the year 2010. IndianOil closed the year 2009-10 with a sales turnover of Rs. 271,074 crore and profits of Rs. 10,221 crore. IndianOil and its subsidiary (CPCL) accounted for over 48% petroleum products market share, 34.8% national refining capacity and 71% downstream sector pipelines capacity in India. IndianOil is currently investing Rs. 47,000 crore in a host of projects. The IndianOil Group of companies owns and operates 10 of India’s 20 refineries with a combined refining capacity of 65.7 million metric tonnes per annum. IndianOil’s cross-country network of crude oil and product pipelines, spanning 10,899 km and the largest in the country, meets the vital energy needs of the consumers in an efficient, economical and environment-friendly manner.Like IOCL it is also suffers from government mal-interference and not a good investment.
- Hindustan Petroleum Corp. Ltd (HPCL – One of the smalled of the major Oil and Gas PSUs with a market capitalisation of Rs. 11,000 crores. The company owns and operates the largest Lube Refinery in the country producing Lube Base Oils of international standards, with a capacity of 335 TMT. This Lube Refinery accounts for over 40% of the India’s total Lube Base Oil production. It has two major refineries producing a wide variety of petroleum fuels & specialties, one in Mumbai (West Coast) and the other in Vishakapatnam, (East Coast). HPCL’s vast marketing network consists of its zonal & regional offices facilitated by a supply & distribution infrastructure comprising terminals, pipeline networks, aviation service stations, LPG bottling plants, inland relay depots & retail outlets, lube and LPG distributorships. HPCL accounts for about 20% of the market share and about 10% of the nation’s refining capacity. The revenue earned was around Rs. 34,000 crores with a net profit margin of 0.6% in Dec’10.
- Oil India Ltd.- With a market capitalisation of Rs. 31,000 crores, OIL is engaged in the business of exploration, development and production of crude oil and natural gas, transportation of crude oil and production of LPG. It became a wholly-owned Government of India enterprise in 1981. The revenue earned by the company was 2,400 crores & with a net profit margin of 36% in Dec ’10. Very similar in profile to ONGC it presently produces over 3.2 million tons pa of crude oil, Natural Gas and over 50,000 Tones of LPG annually. Most of this emanates from its traditionally rich oil and gas fields concentrated in the Northeastern part of India and contribute to over 65% of total oil & gas produced in the region. It has emerged as a consistently profitable international company with exploration blocks as far as Libya and sub-Saharan Africa.
- Petronet LNG Ltd. - It was formed as a Joint Venture by the Government of India to import LNG and set up LNG terminals in the country, it involves India’s leading oil and natural gas industry players. The promoters are GAIL, ONGC, IOCL & BPCL. The company has a Market cap Rs. 9,000 crores. The revenues earned in Dec’10 was approximately Rs.3,600 crores with a net profit margin of 5%.
Other companies which deserve a mention are Essar Oil,Essar Energ,Aban Offshore,Chennai Petroleum,Gujarat State Petroleum,Indraprastha Gas,Gujarat State Petronent LNG
India’s Fossil Fuel Policy – Story of Corruption,Waste,Mafia Growth
India’s Fossil Fuel Subsidies have led to a massive growth of the petrol and diesel mafia in the country.India gives subsidies on diesel,kerosene and cooking gas through its state owned petro/gas companies like BPCL,IOCL,HPCL etc.These subsidies have been given for a long time and have led to the growth of a parallel black economy in these products.They not only lead to capital misallocation but also to the massive illegal profits for a few.It is a well known fact that all petroleum pump owners adulterate petroleum ( which power most of the cars) with subsidized diesel and kerosene.This massive racket earns millions of dollars (if not billions) for a network of company officials,pump owners,government bureaucrats and politicians.The mafia is so strong and powerful that it thinks nothing of burning alive a senior police official.The racketeers are so rich and well connected that despite common knowledge nothing gets done about it.