The top five decision makers in the oil ministry collectively have around 20 months of experience in the sector even as India, the third largest consumer of oil in Asia, struggles to keep pace with oil prices, which have doubled in the last one year.
Projects worth over $20 billion, ranging from the decade-long Iran-Pakistan-India gas pipeline to various oil and gas exploration and production projects, are being re-considered, said officials in the Union Ministry of Petroleum and Natural Gas.
Though crude oil prices in the market are at a record high and analysts say they could breach the $200-per-barrel mark soon, consumption has grown rapidly in India as prices of petrol, diesel, kerosene and liquefied petroleum gas are heavily subsidised by the government and its oil production and marketing companies. Higher demand, coupled with higher prices, is also likely to drive up the country's oil import bill to over $100 billion in this financial year.
The demand for diesel is rising at 25 per cent annually, while the crude oil refiners are capable of catering to only 12-15 per cent growth.
Reliance Industries, India's largest company by market capitalisation, and GAIL India, the largest transporter and marketer of gas, have sought licences to sell natural gas to households and vehicles across 60 cities in India.
The dealers claim that the oil marketing companies -- Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation -- are rationing normal petrol and diesel to their retail outlets. As a result, premium fuels make up almost 50 per cent of the sales of the 410 outlets in Delhi. Oil companies add certain additives to normal petrol and diesel that offer better performance of vehicle engines.
India faces a new energy crisis - unavailability of gas in the international market - that could worsen power supplies and impact a wide range of industries.
ONGC Videsh, the overseas investment arm of state-owned Oil and Natural Gas Corporation, is one of 41 global oil corporations shortlisted by the Iraq government to develop its oil fields. Iraq has the world's largest proven oil reserves.
Industry experts, analysts say the proposal is 'impractical'. The country's oil refining companies are hopeful that the Organisation of Petroleum Exporting Countries will implement a price band for crude oil which they say will bring more certainty to their operations.
The realty companies include Housing Development and Infrastructure Ltd and Hyderabad-based Vasundhara Projects, while the oil services company is Hydrocarbon Resources Development.
Profits of the country's oil marketing companies - Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - fell by as much as 29 per cent in 2007-08 in spite of an up to 56 per cent rise in the oil bonds these companies received during the year compared with 2006-07.
Oil and Natural Gas Corporation, the country's most profitable company, is far behind its global counterparts in terms of revenue earned per barrel. The oil major makes a profit of around $10 a barrel for every barrel of oil it sells, while its global peers earn a profit of over $70 a barrel.
The under-realisation on fuel sales reported by the country's oil companies is overstated by as much as 15 per cent, according to experts, though this does not mean that the oil companies are making profits on selling subsidised petrol, diesel, cooking gas and kerosene.
Under-recoveries by state-owned oil marketing companies are set to hit a new record in June with the under-realisation on the sale of diesel, the largest selling fuel and also the most politically sensitive, almost matching the subsidised selling price.
Oil and Natural Gas Corporation, the country's largest oil and gas producer, is planning to sell 30 to 40 per cent each in two blocks in Vietnam to share the risks and drilling costs. ONGC owns 100 per cent in the two deepwater exploration blocks.
A depreciation in the value of the rupee against the dollar, coupled with surging crude oil prices, are likely to push the country's crude oil import bill to over $100 billion in 2008-09, from $77.02 billion in 2007-08, according to industry officials.
The domestic supply of diesel has been constrained on rapidly growing demand. The diversion of supplies from Reliance Industries, which was given export-oriented unit status last year, has added to the shortage. Reliance produces 10 million tonnes of diesel from Jamnagar.
Rising export of petroleum products helped Commerce Minister Kamal Nath meet 96 per cent of the targeted $160 billion worth of exports in 2007-08, but it could not contain the country's net oil import bill. The net oil import bill in 2007-08 is likely to rise by around 41 per cent over 2006-07 as the country's refineries consumed 9 per cent more crude oil to meet surging demand even as crude oil prices rose nearly 53 per cent during the year.
After the UK-based Hinduja group, Oil and Natural Gas Corporation's proposed Rs 26,500-crore (Rs 265 billion) refinery at Kakinada, Andhra Pradesh, has found new suitors in Reliance Industries and Essar Oil.
The value of the stake is not immediately known but ONGC Videsh Ltd (OVL) -- the overseas investment arm of Oil and Natural Gas Corporation -- is likely to pay an initial $300 million for drilling operations. Russian company Rosneft, which owns 70 per cent in the project, will be offloading its stake to OVL if the deal goes through. The remaining 30 per cent stake is held by China National Petroleum Corporation.
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