Political factors

Pre-independence period: The Petroleum

Act
Post independent period:

Early phase (1947

to 1969)
Development phase (1970 to 1989)
Economic liberalization phase of
1990s

Delicensing of refining sector from 1998

The Hydrocarbons Vision 2025

Explaination start
Political factors: refer to influence of a

political entity such as governments

policies, politicians interests, and the
ideologies of several political parties on the
industry.
i.e. how and to what degree a government
intervenes.
Includes areas such as tax policy, labour
law, environmental law, trade restrictions,
tariffs, and political stability, goods and
services which the government wants to
provide.

In the pre-independence period, The Petroleum

Act to control issues relating to import, transport,

storage, production, refining and blending of petroleum
was already in place since 1934.
Indian petroleum industry in the post independent
period it may be divided into three distinct phases:
Early phase (1947 to 1969)- when the
government consolidated its control over the
industry with Soviet assistance;
Development phase (1970 to 1989)- in this
period the US companies played dominant role
replacing the Soviets and
Economic liberalisation phase of 1990s.

Explaination: post
independence
the Government of India, under the

Industrial Policy Resolution of 1954,

announced that petroleum would be the
core sector industry.
In pursuance of the Industrial Policy
Resolution, 1954, petroleum exploration &
production activity was controlled by the
government- owned National Oil
Companies (NOCs), namely Oil & Natural
Gas Corporation (ONGC) and Oil India
Private Ltd (OIL).
Thus, all future development of petroleum
industry was reserved for public sector

Thodi bakwaas
There were four options with govt. for the development
of its petroleum industry:
1. Seek assistance of a great power like Soviet Union,
2. Collaborate with a small country like Rumania
3. Explore the possibility of a government to government cooperation with other small but neutral countries like Austria
which had developed sufficient technical expertise in
petroleum industry by that time;
4. Try and develop the industry through self-help by
employing technicians and bringing necessary machinery
from which ever source available.
the government went for the first alternative.

Thodi bakwaas
US companies and multilateral funding agencies

like World Bank replaced soviets

In the early seventies, the government of India
nationalised the refinery and marketing facilities
of three foreign oil companies.
Out of those three Burmah -Shell, the British company
desperately tried to stay in India even as junior partner
to a joint venture with a national oil company. But the
government did not accept Burmah-Shells' proposal.
The other two American companies - namely Caltex
and Standard Vaccum were themselves eager to leave
the country due to their internal organisational
restructuring and domestic compulsions.

To overcome the severe balance of

payment crisis of 1991, the government

of India took resort to the International
Monetary Fund (IMF) and the World
Bank prescriptions to bail out its ailing
economy.
liberalisation in the mid-nineties: greater
access to the refinery sector for private
companies and a green light for joint
ventures with state-run enterprises/public
sector refining company.

Later, Reliance Industries Ltd. (RIL) was

allowed to build on their own the largest

refinery in the country and became the second
largest player in oil refining sector with 27 MMTPA
state of the art refineries at Jamnagar, Gujarat.
from 1998, the refining sector has been
delicensed. private and joint sector refineries have
been permitted to import crude oil freely without
import license for actual use in their own refineries.
This will have adverse effect on the operating cost
of public sector refineries should international crude
price falls below the domestic crude price.

To address the absence of a policy, the government

released in early 2000 Hydrocarbon Vision 2025, a

study whose recommendations may become official
policy. The Hydrocarbons Vision 2025 lays down the
framework which would guide the policies relating to
the hydrocarbons sector for the next 25 years. Issues
such as E&P, refining, marketing, external policy, oil
security, tariff and pricing, and restructuring and
disinvestment are addressed. The study suggests,
among other things, that India revise foreign ownership
regulations for refinery operations to allow 100%
foreign ownership. The India Hydrocarbon Vision 2025
report estimates future refinery demand at 368 million
tons by 2025.

POLICIES AND
REGULATIONS
The Petroleum Act to control issues relating to import,

transport, storage, production, refining and blending of

petroleum was already in place since 1934.
Further, the Oil Fields (Regulation and Development) Act, 1948
and the Petroleum and Natural Gas Rules, 1959 provided
regulatory framework for domestic exploration and production
of Oil & Gas.
Hydrocarbon Vision
The Hydrocarbons Vision 2025 lays down the framework which

would guide the policies relating to the hydrocarbons sector

for the next 25 years. Issues such as E&P, refining, marketing,
external policy, oil security, tariff and pricing, and
restructuring and disinvestment are addressed.