"PSU Retention vs Privatisation Debate in India's Upstream Oil Sector"
Strategic Petroleum Reserves (SPR)
government-held crude oil stockpiles providing buffer against supply disruptions, measured in days of import cover.
Upstream E&P
exploration and production of crude oil and natural gas, as distinct from midstream (transport/storage) and downstream (refining/marketing) segments.
India's upstream petroleum sector — the exploration and production (E&P) of crude oil and natural gas — has historically been anchored by two central public sector enterprises: Oil and Natural Gas Corporation (ONGC), established as a commission in 1956 and corporatised in 1994, and Oil India Limited (OIL), incorporated in 1959. Both were created on the foundational premise that energy security is a matter of strategic national interest rather than purely commercial logic — a philosophy enshrined in the Industrial Policy Resolution of 1956, which reserved industries vital to the economy for state control.
The broader E&P policy framework has evolved through successive licensing regimes. The Hydrocarbon Exploration and Licensing Policy (HELP), introduced in 2016 to replace the earlier New Exploration Licensing Policy (NELP), introduced a revenue-sharing model and an open-acreage licensing system designed to attract private and foreign capital alongside PSUs. Midstream and downstream regulation falls under the Petroleum and Natural Gas Regulatory Board (PNGRB), established under the PNGRB Act, 2006, while upstream E&P remains under the Ministry of Petroleum and Natural Gas. The question of privatising upstream PSUs has historically been treated as politically untouchable — unlike downstream entities such as Bharat Petroleum Corporation Limited (BPCL), whose strategic disinvestment was announced but subsequently shelved.
India's energy security challenge is structural: domestic crude output from ONGC and OIL has declined nearly 20 per cent over the past decade, while India imports over 85 per cent of its crude oil requirements. The country holds only 6–7 days of crude import cover in Strategic Petroleum Reserves (SPR) — far below the International Energy Agency (IEA) norm of 90 days and China's approximately 120 days. This gap creates acute vulnerability to supply disruptions, whether from geopolitical chokepoints such as the Bab el-Mandeb or the Strait of Hormuz, or from price volatility in structurally oversupplied global markets.
The privatisation debate turns on a fundamental resource-allocation question: should scarce public capital continue funding high-risk upstream E&P — where frontier-basin finding costs in areas such as the Godavari, Mahanadi, and Andaman basins can reach $60–80 per barrel against a Brent price near $70 — or be redeployed toward SPR expansion and renewable energy? Proponents of privatisation argue that private entities are more capital-efficient and that proceeds could fund a 60-day SPR buffer. …
Consider the following statements:
Statement-I: India, despite having uranium deposits, depends on coal for most of its electricity production.
Statement-II: Uranium, enriched to the extent of at least 60%, is required for the production of electricity.
Which one of the following is correct in respect of the above statements?
With reference to two non-conventional energy sources called 'coalbed methane' and 'shale gas', consider the following statements:
1.Coalbed methane is the pure methane gas extracted from coal seams, while shale gas is a mixture of propane and butane only that can be extracted from fine-grained sedimentary rocks.
2.In India, abundant coalbed methane sources exist, but so far no shale gas sources have been found.
Which of the statements given above is/are correct?
With reference to India's Strategic Petroleum Reserves (SPR), consider the following statements:
1.India's existing SPR facilities are located at Visakhapatnam, Mangalore, and Padur.
2.India currently holds approximately 90 days of crude import cover in its SPR, meeting the IEA norm.
3.The primary purpose of SPR is to provide insurance against supply disruptions, not to generate revenue.
Which of the statements given above is/are correct?
Assertion (A): Privatising ONGC would not necessarily improve the commercial viability of exploration in India's frontier basins such as the Andaman deep water.
Reason (R): The economics of hydrocarbon exploration are determined by geology, forward price curves, and capital costs — factors that are indifferent to the ownership structure of the operating entity.
Which one of the following is correct?
With reference to the Hydrocarbon Exploration and Licensing Policy (HELP), which of the following statements is/are correct?
1.HELP replaced the New Exploration Licensing Policy (NELP) in 2016.
2.HELP introduced a revenue-sharing model in place of the earlier production-sharing contract (cost-recovery) model.
3.HELP is administered by the Petroleum and Natural Gas Regulatory Board (PNGRB).
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