India's Top Upstream & Downstream Oil Companies: An Analysis

The oil and gas industry is one of the eight core industries in India. It has a powerful influence on all vital sections of our economy. Based on their operations and position in the supply chain for crude oil and its products, oil companies can be mainly divided into two: Upstream & Downstream. From exploration and production of oil to refinement and distribution, these companies play a crucial role in India’s economic growth.

In this article, learn about the major upstream and downstream oil companies of India.

What are Upstream Oil Companies?

The upstream segment is responsible for finding and producing crude oil and natural gas. This includes searching for potential oil fields, drilling exploratory wells, and examining whether they have the potential to deliver a sizable amount of oil. The companies involved in this segment also recover crude oil and natural gas to the surface. Such entities are also known as Exploration and Production (E&P) companies. They are heavily dependent on research and development (R&D) activities. The members of E&P companies include geologists, scientists, engineers, and seismic experts.

Modern oil exploration relies on geological surveys conducted using electronic equipment and artificial intelligence (AI). Mechanical drilling and fracking equipment has become more advanced and efficient over the past few years.

Oil & Natural Gas Corporation (ONGC)

Oil and Natural Gas Corporation (ONGC) Ltd is the largest producer of crude oil and natural gas in India. Its operations are primarily centered around the extraction of oil. The company accounts for ~71% of India’s total crude oil production. 

ONGC operates nearly 105 oil drilling rigs and 74 workover (portable) rigs. It owns more than 11,000 km of oil pipelines across India. Downstream oil companies such as Indian Oil Corp. (IOCL), BPCL, and HPCL use the crude extracted by ONGC as their raw material.

The Government of India (GoI) holds a majority stake (60.4%) in the company. ONGC comes under the administrative control of the Ministry of Petroleum & Natural Gas. You can learn more about the energy giant here.

Oil India Limited (OIL)

State-owned Oil India Ltd explores, develops, and produces crude oil and natural gas in India and internationally. The company operates 1,157 kilometers of cross-country crude oil pipelines. It also owns 13 drilling rigs, 14 work-over rigs, and 10 crude oil pumping stations in Assam, West Bengal, and Bihar.

OIL has participating interests in New Exploration Licensing Policy (NELP) blocks in Mahanadi Offshore, Mumbai Deepwater, and Krishna Godavari Deepwater. It is also involved in various offshore projects in Libya, the United States, Nigeria, Sudan, Venezuela, etc.

Reliance Industries Ltd

Reliance Petroleum, a subsidiary of RIL, is one of the major private players in the Indian upstream oil market. It operates two prominent oil rigs in the Bay of Bengal— Dhirubhai Deepwater (DD) KG-1 and DD KG-2. Reliance Industries also owns the largest refinery in the world— the Jamnagar oil refinery. It has the capacity to produce 1.97 lakh cubic meters of crude oil every day!

Larsen & Toubro Ltd

The leading engineering and construction company works on several projects that deal with the extraction of oil and its processing. L&T also offers critical equipment and systems for oil & gas projects. The company’s hydrocarbon business caters to the entire hydrocarbon value chain, including oil & gas processing, petroleum refining, chemicals & petrochemicals.

BP Plc

BP Plc is a British multinational oil and gas company headquartered in London. In 2020, the company formed an Indian joint venture (JV) with Reliance Industries Ltd. Operating under the “Jio-bp” brand, the JV aims to become a leading player in India's fuel and mobility markets.

What are Downstream Oil Companies?

Downstream oil companies are involved in the refining, manufacturing, and marketing of petroleum products. This segment consists of oil refineries, petrochemical plants, and fuel distributors/retailers. They offer products such as petrol, diesel, natural gas, jet fuel, synthetic rubber, plastics, pesticides, pharmaceutical ingredients, and much more. Thus, downstream oil companies oversee the critical final steps of refining and converting crude oil into final products, which are then sold to end-consumers.

Indian Oil Corporation Ltd (IOCL)

IOCL is engaged in the refining, transportation, research & development, and marketing of petroleum products in India. Its products include petrol, diesel, lubricants, greases, aviation fuel, industrial fuels, and marine oils. The state-owned company operates 11 refineries across India, ~15,000 km of crude oil & gas pipelines, and 7 foreign subsidiaries. IOCL holds a 32% market share in the downstream oil industry.

Hindustan Petroleum Corporation Ltd (HPCL)

HPCL, a subsidiary of ONGC Ltd, refines and markets petroleum products in India and across the globe. The company offers petrol, diesel, kerosene, liquefied petroleum gas (LPG), naphtha lubricants, greases, and aviation turbine fuel. It also markets and exports bitumen, jet and marine fuel, marine lubes. 

As of March 2021, HPCL’s operating network consisted of 18,634 retail outlets, 6,192 LPG distributors, 46 aviation service facilities, and 41 oil & gas terminals. The company owns two refineries in Mumbai and Visakhapatnam. HPCL has secured a market share of 25% in the downstream oil sector.

Bharat Petroleum Corporation Ltd (BPCL)

BPCL refines crude oil and markets petroleum products in India. It has a network of ~15,402 fuel stations that sell petrol, diesel, automotive liquefied petroleum gas (LPG), and compressed natural gas. The company also offers automotive engine oils, gear oils, greases, and jet fuel to airlines. BPCL operates oil refineries in Mumbai, Bina (Madhya Pradesh), Numaligarh, and Kochi. They operate 2,241 km of multi-product pipelines. 

BPCL has a ~24% market share in India's downstream oil sector.

The Way Ahead

Global crude oil prices have touched the roof amidst Russia’s invasion of Ukraine. There is a notable surge in demand, and the supply chains have broken. The oil market will face its biggest supply crisis in decades until the Organization of Petroleum Exporting Countries (OPEC) boosts production. A further increase in oil prices can push prices of essential commodities to higher levels.

Meanwhile, OPEC has projected that India's demand for oil will double from current levels to ~11 million barrels per day by 2045. Due to the increasing demand for petroleum products, the Indian government has introduced various policies and subsidies to support upstream and downstream oil companies. It has even allowed 100% foreign direct investment (FDI) in upstream and private sector refining projects.

However, most oil companies mentioned above are now making a slow transition to renewable energy options. Crude oil, hydrocarbon, natural gas, and other fossil fuels are limited in nature. Such resources have been depleting rapidly in recent years. In the future, there will be a time when oil becomes scarce. India has pledged to decrease the carbon emission concentration in its GDP by 33%-35% by 2030 from the levels of 2005. The government also aims to double the country’s consumption of renewable energy to 20% by 2025.

Large oil companies are investing heavily in green energy projects and electric charging infrastructure to help India achieve these ambitious targets. Let us look forward to seeing how they execute their strategic plans.