Demand for oil and fossil fuels in India continues to expand. With strong economic growth, the need for gas production will continue to grow. 

India is looking to clean up its pollution problems with clean energy transportation; however, the plan for net-zero carbon is far out into the future. So, the Indian government is looking to keep oil production high and affordable for the country’s citizens. 

Regulations have been implemented by India’s oil ministry, allowing operators to sell locally produced crude oil in the domestic market with no restrictions. The old policy did not allow an oil field operator to sell crude oil directly into the Indian market without the government’s permission. Under the new policy, these restrictions have been lifted. 

It has been reported that the demand for gasoline, jet fuel, and diesel has increased sharply year on year between January 2023 and May 2023 by roughly 8.7%, 28%, and 8.4%, respectively. Also, during the fiscal year ending in March of 2023, it has been reported that India had consumed roughly 222 million tons of oil products, up 10% from the year before, according to India’s oil ministries data. These numbers are the highest output of petroleum products in its history for the world’s third-largest oil consumer.

In addition to consumer activity associated with oil demand and transportation, government capital spending has been very high, driving additional fuel consumption. This demand, in particular, has been in construction and infrastructure.

How much oil does India consume per day? 

India consumes roughly 5 million barrels of oil per day. The country is growing at 3%, above the average global oil growth rate of one percent.   Overall, the Indian government has insulated itself well from the global crude and gas prices spike from the consumption of inexpensive Russian oil and its oil exploration initiatives. 

In addition, the Indian government has assisted their citizens by freezing diesel and petrol prices since April. This has buffered Indian citizens from inflationary price pressures and their impact on their lives.

What are the largest oil companies in India? 

crude oil investing in India.

Reliance BP Mobility Limited, previously known as Reliance Petroleum, is one of the largest Petroleum companies in India. The company is headquartered in Ahmedabad, Gujarat, India, and is invested in upstream and downstream oil and gas operations. The company was founded in 2008, and the present CEO is Mukesh Ambani.  

British Petroleum (BP)and Reliance Industries Limited (RIL) joined forces in 2019. British Petroleum paid RIL one billion dollars to receive a forty-nine percent stake in the company. RIL is the primary shareholder with 51% ownership of the company. The company operates under the brand Jio-bp. Presently, 1,400 service stations operate under the company, and the plan is to expand that number to 5,500 stations within the next five years. The increase in service stations will require its workforce to quadruple from roughly twenty thousand to eighty thousand. 

Indian Oil Corporation is a multinational oil and gas organization headquartered in New Delhi. Shrikant Madhav Vaidya is the present CEO of the company. The company was founded in 1959 and is one of India’s most significant downstream players.   

Indian Oil Corporation operates under the Ministry of Petroleum and Natural Gas, which is the government of India. The enormous company is listed as 142nd on the Fortune Global 500 list. In addition, the company employs roughly thirty-one thousand six hundred employees.  

Indian Oil Corporation accounts for almost half of India’s market share. The company also owns and operates many of India’s refineries, accounting for eleven of the twenty-three refineries within the country.   

Another large oil producer and downstream player is Hindustan Petroleum Corporation or HP. The company is headquartered in Mumbai, India. Pushp Kumar Joshi is the chairman and managing director of the company.   The company was founded in 1974. The company employs roughly nine thousand one hundred individuals.

In 2017, the government of India announced that they were acquiring Hindustan Petroleum through ONGC. The purchase was a majority sale of Hindustan of 51% of the company. 

HPCL owns two large refineries in India. The first refinery is located in Mumbai, which provides roughly 9.5 million tonnes of oil per year, and the second refinery is located in Visakhapatnam, which provides 8.3 million tonnes of oil. In addition, HPCL is the largest owner and operator of a lubricant refinery in India. 

The Oil and Natural Gas Corporation Limited (ONGC) is run by the Ministry of Petroleum and Natural Gas of India. The company is headquartered in New Delhi and was founded in 1956. Arun Kumar Singh is the company’s chairman and CEO. The company produces roughly 70% of India’s production of crude oil as well as 84% of the country’s natural gas. The company employs roughly twenty-seven thousand one hundred individuals. ONGC also has an extensive reach outside India and operates within 15 countries. 

Another Indian public sector operation is Bharat Petroleum Corporation. The company operates under the Ministry of Petroleum and Natural Gas of the government of India. Bharat Petroleum was founded in 1952 and is led by G. Krishnakumar, the chairman and managing director. The company is headquartered in Mumbai, India, and employs roughly eight thousand five hundred individuals.   The company has upstream and downstream operations.

How have Indian oil stocks performed recently? 

The overall market for Indian oil stocks has performed well recently. With the increased oil output by Indian producers, while the world market for oil has declined, has increased shares in Indian oil companies.

Analysts who follow the Indian oil market believe that the market has reached a turning point and is expected to gain upward momentum. In addition, one major factor has helped Indian oil and gas companies recently. The Indian government, on May sixteenth, cut the windfall tax on crude oil to zero from four thousand one hundred per tonne. In July of twenty twenty-two, the Indian government imposed a windfall tax, which was levied on all crude oil producers. This tax also extended a tax on all ATF, diesel, and petrol exports.

Also, well-capitalized oil companies have returned additional cash to their shareholders than their existing market caps since two thousand and eight. 

How did oil stock perform after the Indian government reinstated the windfall tax?

On July fifteenth, twenty twenty-three, the Indian government reinstated the windfall tax on crude oil production. The windfall tax was lifted two months before the reinstatement. The tax will consist of an exercise duty of Rs 1,600 per tonne. The revision of the windfall tax comes during a time of rising oil prices. The windfall tax is reviewed every fortnight and is based on the average oil price over the previous two weeks.

Does India import a lot of oil from Russia? 

India receives a good amount of its crude oil from Russia. However, the amount of the Russian importation of oil might have hit its limit for the rest of the year due to political and infrastructural constraints. India has benefited from the war in Ukraine and able to purchase discounted Russian oil since February of last year. The volume of Russian oil hit 2.2 million barrels per day in June, the maximum amount India can bring in at a given time.  

The Bottom Line

India aspires to reduce its reliance on fossil fuels; however, that will not happen for a while. The demand for oil in India is increasing yearly. The government of India is looking to keep oil production high so that it is affordable to its citizens.

Several significant upstream and downstream oil companies in India include Reliance BP Mobility Limited, Indian Oil Corporation, Hindustan Petroleum, Oil and Natural Gas Corporation, and Bharat Petroleum. 

Oil stocks within India are subject to the windfall tax, which is implemented so that companies within this sector pay their fair share of tax money regarding their profits. The windfall tax is typically used when economic conditions provide for above-average profits.   So, because of the war in Ukraine and the oil demand, the windfall tax is used to have the oil companies pay their fair share in taxes from this windfall event. 

The Indian government has taken advantage of the war in Ukraine and has been able to receive cheap oil from Russia. India’s consumption of cheap Russian oil and domestic oil operations has allowed the country somewhat to insulate itself from massive oil and gas price spikes.

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