India’s state-owned Public Sector Undertakings (PSUs) in the oil and gas sector witnessed a marginal increase in output from their overseas fields during the 2023-24 financial year.
This modest uptick comes after four consecutive years of decline, highlighting the challenges faced by Indian firms in ramping up their overseas oil & gas production capabilities. While the production figures – reaching 19.9 million metric tonnes of oil equivalent (MMTOE) in 2023-24 – represent a slight improvement over the previous year’s 19.5 MMTOE, they remain significantly below the peak achieved in 2018-19. This stagnation can be attributed to two key factors: the natural maturation of existing producing fields and a slowdown in acquiring new overseas assets. The revival of production at Russia’s Sakhalin-1 project, in which ONGC Videsh holds a stake, offered a temporary reprieve. Disruptions caused by the Russia-Ukraine war had severely impacted output in 2022. Similarly, production resumed at ONGC Videsh’s South Sudan projects after unprecedented floods forced their closure.
However, these localised recoveries were offset by the broader geopolitical landscape. Production cuts implemented by OPEC+ – a group of oil-producing countries led by Saudi Arabia and Russia – impacted the output of Indian firms with assets in member nations like Russia, UAE, Azerbaijan, and South Sudan. These countries contribute significantly to India’s overseas oil & gas production, and limitations on their output restrict the potential gains for Indian PSUs. The strategic decisions made in the past decade also play a role in the current scenario. The aggressive investments in Russian fields during 2015-16 propelled a significant surge in Indian overseas oil & gas output. However, this period of expansion was not sustained. Acquisitions have slowed down in recent years, leaving a gap in new exploration and development projects. Additionally, some previously acquired assets, like the giant gas field in Mozambique, remain stalled due to security concerns.
Looking ahead, Indian PSUs face an uphill battle in bolstering their overseas oil & gas production. While the normalisation of production at existing fields like Sakhalin-1 is positive, long-term growth hinges on securing new assets and navigating the complexities of the global oil market. The strategic exploration of opportunities beyond OPEC+ member countries and expediting the development of delayed projects will be crucial in determining the future trajectory of India’s overseas oil & gas ambitions.
