Oil exploration and oil marketing companies in India constitute a major industrial sector in India. Generally speaking, they operate in two areas: production and distribution of petroleum products. Production firms are usually referred to as upstream companies and they focus mainly on exploration and production of natural gas and crude oil. Oil exploration companies in India seek new sources of crude oil. On the other hand, the downstream business deals with the sale and distribution of petrochemicals, gasoline, and diesel end products as well as refining.
The upstream segment in the Indian context comprises companies such as Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL). Upstream and downstream companies form the basis of the global oil industry that fuels economies all over the world.
What are upstream oil companies?
Upstream oil companies are petroleum companies in India that explore and extract oil and natural gas resources. These business enterprises seek underground oil and gas reserves. The extracted gas and oil are then transported to downstream companies for refining and marketing. The businesses in this sector also redeem natural gas and crude oil to surface from subsurface reservoirs. These organizations are also known as exploration and production, or E&P, businesses. They depend a great deal on processes that involve research and development (Research & Development).
The E&P businesses employ geologists, scientists, engineers, and seismologists. Some of the fundamental prerequisites of modern oil exploration include geological surveys that apply artificial intelligence and technology. For instance, fracking or extracting oil from shale rocks in the US in the last decade transformed the country into a net oil exporter.
Major upstream oil companies in India
The upstream sector of the Indian oil industry is involved in the discovery, production, and exploration of natural gas and crude oil, which is crucial to maintaining India’s energy security. Given below is the list of some of the major operational upstream oil & gas firms in India that are a mix of private and PSU companies.
| Upstream oil firms | Market cap Rs.Cr. | P/E | Div Yld % |
| Reliance Industries Ltd | ₹20,14,254 Cr. | 29.3 | 0.34 |
| ONGC | ₹3,76,844 Cr. | 8.27 | 4.09% |
| Oil India | ₹96,418 | 12.3 | 1.77% |
All data from Screener.in as of Sept. 27, 2024
Reliance Industries Ltd
Reliance Petroleum, a subsidiary of RIL, is a dominant private player in the Indian upstream oil sector. It is also the owner and operator of Dhirubhai Deepwater (DD) KG-1 and DD KG-2, two well-known oil rigs in the region of the Bay of Bengal.
Oil and Natural Gas Corporation (ONGC)
The Oil and Natural Gas Corporation (ONGC) is considered one of the most important upstream oil exploration companies in India. ONGC, the largest crude oil and natural gas company in India, contributes around 75% to India’s domestic production. The business is present in India through participation in onshore and offshore activity in the exploration as well as production of oil. The government of India holds a 60.41% stake in ONGC as of March 31, 2023.
Moreover, the firm has operation in foreign locations such as Sudan, Brazil, and Russia among others. Overcoming this challenge can to a great extent be explained by the fact that the main goal of India is to minimize its dependence on imports of foreign crude oil, the achievement of which depends primarily on the efforts of ONGC.
Oil India Ltd.
The state-controlled Oil India Limited (OIL) is engaged in the exploration, development, and production of crude oil and natural gas. It also has 10 crude oil pumping stations, 13 drilling rigs and 14 work-over rigs in Assam, West Bengal, Bihar. OIL presently operates in the Krishna Godavari deep water, Mumbai deep water, and Mahanadi offshore New Exploration Licensing Policy (NELP) domains. It also participates in offshore operations in Libya, Sudan, Nigeria, the United States, and Venezuela.
What are downstream oil companies?
Refined petroleum merchandise is distributed countrywide through retail fuel stations across the country. Downstream companies procure crude oil that is extracted by upstream businesses to create petroleum products such as diesel, petrol, cooking gas, and other petrochemicals. Several items, including jet fuel, gas, diesel, synthetic rubber, plastics, natural gasoline, and propane, are produced by the downstream industry. Therefore, downstream petroleum companies in India manage the vital last leg of refining and turning crude oil into finished products to be delivered to retail customers.
Major downstream oil companies in India
These are some of the most crucial enterprises in the downstream oil market in India that support the country’s energy security and economic growth. Few large organizations control this market in India, which contributes to a significant chunk of the country’s energy consumption. Some of the biggest petroleum companies in India that are downstream players are listed below.
| Downstream Oil Companies | Mar Cap Rs.Cr. | P/E | Div Yld % |
| Indian Oil Corporation Ltd. | ₹ 2,40,090 Cr. | 7.79 | 7.06% |
| Bharat Petroleum | ₹ 1,47,097 Cr. | 7.55 | 6.19% |
| Hindustan Petroleum | ₹ 88,795 Cr | 8.98 | 5.03% |
Indian Oil Corporation Ltd.
Indian Oil is engaged in refining, transportation, and marketing petroleum products. Diesel, petrol, gasoline, greases, lubricants, aviation gas, commercial fuels, and marine oils are among its merchandise. The state-owned business enterprise runs around 15,000 km of fuel and crude oil pipelines, eleven refineries in India. With a 32% market share, IOCL dominates the downstream oil sector.
Bharat Petroleum Corporation Ltd.
Bharat Petroleum Corp. Ltd is a public sector undertaking, with the government of India holding a 52.98% stake as on March 31, 2023. It has refineries located at Mumbai, Kochi, and Bina and LPG bottling plants and lube blending plants at various locations.
Hindustan Petroleum Corporation Ltd.
HPCL, a refiner and international distributor of petroleum products, is a division of ONGC Ltd. The company sells aircraft turbine fuel, lubricants, greases, liquefied petroleum fuel (LPG), gasoline, diesel, and kerosene. Additionally, it sells and exports marine lubricants, jet and marine gas, and bitumen. The commercial enterprise owns refineries in Visakhapatnam and Mumbai. HPCL holds a 25% market share in the downstream oil sector.
How do the two segments operate in India?
The upstream and downstream oil and gas businesses perform different functions. Upstream companies are involved in the exploration and production of oil and gas resources which require enormous investment in machinery equipment, technology, and manpower. They face several challenges such as geological risks, environment-related concerns, and societal implications while conducting their operations.
On the other hand, downstream oil firms perform the last-mile operation in the oil value chain, which includes the conversion of crude oil into finished products such as diesel, gasoline, and other fuel products. This sector is involved in refining crude oil into finished goods and transporting them to consumers through retail fuel stations.
Upstream oil companies require drastically different business models than the downstream businesses in India. While downstream operations mainly process, refine, and segregate crude oil into different products, upstream sector concerns exploration, development, and production of crude oil and natural gas. However, to satisfy the country’s demand for petroleum products, the two operations have to work in sync with each other.
Conclusion
In the oil business, the upstream oil companies and the downstream ones perform critical roles. Upstream deals with production and exploration, while downstream focuses on processing and distribution of the end product. Oil and gas companies in India are thus crucial to the security of energy supplies and the advancement of the Indian economy. Together, these industries ensure steady production and distribution of petroleum products to meet the needs of both retail and commercial customers.
