The state-owned company Oil and Natural Gas Corporation
Limited (ONGC) is India's largest company devoted to exploration and production
(E&P). This paper attempts to unpack the dynamic of the government-ONGC
relationship. Focusing specifically on how government ownership and control has
influenced ONGC's performance and strategy, this paper makes four main
First, ONGC exists, just as with national oil companies in
many other countries, because of a legacy of suspicion about outsiders.
It performed well when it was tasked with things that were not that difficult
and when it had help for the more difficult ventures, such as frontier E&P
Second, ONGC has run into trouble as it matured, and
the roots of its troubles are mainly in its interactions with the GoI and
secondarily in its management.
Third, a slew of reforms instituted since
the mid 1990s have fundamentally changed the landscape of the E&P sector in
India and the dynamic of government-ONGC relationship. Targeted at improving
corporate governance, enhancing competition in E&P, and eliminating price
controls, those reforms have had a mixed impact on ONGC's performance and
strategy. They also highlight the difficulties the government has had in
encouraging higher efficiencies in ONGC and the oil and gas sector.
given the deep interconnects of the oil and gas sector with India's political
economy, fixing the oil and gas sector essentially entails fixing the larger
political economy within which the sector is embedded.