Introduction

The national oil company Oil and Natural Gas Corporation Limited (ONGC) is India’s largest company devoted to exploration and production (E&P). Founded in 1956, ONGC has seen remarkable growth in the last five decades. In 2007–2008, ONGC group’s total production of oil and oil-equivalent gas (O+OEG) was about 60 million metric tonnes per annum (MMTPA) or 1.2 million barrels per day, thus accounting for nearly 80 percent of India’s oil and gas production. In 2007 Energy Intelligence Top 100 ranked ONGC at 31 among global oil and gas companies.

ONGC’s evolution is a remarkable story of how state-owned firms respond and adapt to shifts in owner (government) priorities, which in turn are strongly influenced by macroeconomic and political conditions. Historically, ONGC has been the Government of India’s (GoI’s) trusted custodian of India’s oil and gas reserves. As such, ONGC enjoyed a near monopoly in this sector for nearly four decades (1955–1995), during which good luck and easy oil elevated ONGC to stardom. During those years ONGC also functioned as the de facto regulator of the oil and gas sector. The oil ministry (the government ministry in charge of the sector) depended heavily on ONGC for coordinating activities in the sector. But changing economic priorities and soaring domestic demand for oil and gas in India have significantly changed the dynamic of ONGC’s relationship with the government in many ways. Through a series of reforms since the mid 1990s, the GoI has increasingly tried to maintain an arm’s-length relationship with ONGC. ONGC is exposed to more competition in the sector than ever before and it has also lost its regulatory function, which is now the responsibility of a separate arm within the government.