India's national oil companies need to accelerate acquisitions of overseas oil and gas assets to bolster the country's long-term energy security, according to Nick Sharma, Executive Director of Upstream Energy at S&P Global. Speaking to ANI on Tuesday, Sharma highlighted that recent geopolitical developments have underscored the importance of securing energy resources beyond domestic borders.
Growing Imbalance in Upstream Energy
Sharma noted that India faces a significant and growing imbalance on the upstream energy side. He said the country requires a two-pronged strategy: attracting more investment into domestic exploration while simultaneously expanding the international presence of its state-owned oil companies. "Security is a bit of a predicament, particularly on the upstream side where there's a big growing imbalance," Sharma said. "I think for India coming out of the current crisis, it's very important that they look at how do they strengthen investment into the country, but more importantly, how do the national oil companies go overseas and be a bit more acquisitive to kind of help push that gap."
Limited Overseas Growth in the Last Decade
According to Sharma, India's national oil companies such as Indian Oil Corporation (IOC) and Oil and Natural Gas Corporation (ONGC) have seen limited overseas growth over the past decade, even as the country's energy demand has continued to rise. "I think for the national oil companies, the last decade, we've seen very little growth from the IOC, ONGC to go overseas. I think these recent events have really brought back the security angle," he stated.
Sharma added that national oil companies across Asia are increasingly recognizing the need to diversify their resource base through international acquisitions. "Most national oil companies, whether from India or Southeast Asia, they're all realizing, look, buffer our bases a little bit and part of that story is to be a bit more internationally acquisitive, buy out some more assets and opportunities," he said.
Addressing the 5 Million Barrel Per Day Gap
Sharma argued that acquiring overseas resources would help India manage its growing demand-supply gap. Referring to India's dependence on imported crude, he said the country faces a "5 million barrel per day gap on oil" and that international acquisitions should become a major focus area. "When you look at India's 5 million barrel per day gap on oil and the continuing growth of the Indian economy, the oil story can't be avoided. You need to be more internationally acquiring assets. And that has to be quite a broad-based and a pretty strong effort for the Indian national oil companies," he said.
Sustainable Approach Beyond Stockpiling
On building inventories, Sharma said stockpiling comes with significant costs and that securing overseas oil and gas resources could be a more sustainable approach to improving energy security. He added that one of the biggest challenges facing the sector is a reduction in global exploration spending compared to a decade ago, making it harder to attract companies into high-risk frontier basins despite India's strong long-term demand outlook.
Potential for Deepwater Exploration
According to Sharma, continued exploration success in deepwater and ultra-deepwater regions could eventually encourage greater participation from global energy companies and help strengthen India's domestic energy production over time. He emphasized that import diversification and energy security cannot rely only on domestic efforts, and that a more aggressive international acquisition strategy is essential for India to secure its energy future.
