Indian companies are aggressively taking steps to meet the future demand for oil and gas by acquiring reserves both domestically and abroad.

India is currently the fourth largest oil consumer in the Asia-Pacific region. Oil constitutes nearly a third of India's total energy consumption. India's demand for petroleum has been increasing and thus putting pressure on the country's imports. At the same time, Indian oil majors are aggressively working on increasing their oil and gas reserves either by stepping up the exploration activity or by acquiring companies and oil fields abroad.

Given the acute shortage of oil and gas reserves in the country with large parts of the country remaining unexplored, the government has allowed private players to take part in the exploration activity. The New Exploration and Licensing Policy (NELP) was aimed at attracting private investments in exploration. The move is proving successful in drawing both domestic and international participants towards explorations. Some of the companies like Reliance have met with success in the Krishna-Godavari basin.

In order to encourage competition among the three public-sector oil majorsONGC, IOC, and GAILthe Cabinet Committee on Economic Affairs has allowed the offloading of cross-holdings of the three state-owned oil companies from each other. The amount generated out of the sale of the cross-holdings would be used to fund the acquisitions while integrating both forward and backward.

Indian Government has encouraged state-owned firms to bid aggressively for foreign petroleum assets. Indian oil companies have increased their presence globally to acquire new oil fields. Oil and gas from OVL's partnership with Rosneft in Sakhalin-I, Russia, is expected to commence full production from the last quarter of 2006-07. OVL and China National Petroleum Corporation Limited (CNPC) jointly entered into an agreement to acquire Petro-Canada's entire shares in four production-sharing contracts in Syria. These two companies are working together in Sudan also. OVL is also thinking of buying a Canadian company, Petrokazakh in Kazakistan. It has already picked up stakes in 15 properties in 13 countries including Myanmar, Vietnam, Libya, Iraq, and Angola.

The Analyst Magazine, Oil Industry, Total Energy Consumption, New Exploration and Licensing Policy, NELP, Economic Affairs, China National Petroleum Corporation Limited, CNPC, Oil and Natural Gas Corporation, ONGC, Special Purpose Vehicles, SPVs, Indian Oil Corporation Limited, IOC, Kochi Refineries Limited, KRL, Bharat Oman Refineries Ltd. , BORL, Aviation Turbine Fuel, ATF.