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 arguments.
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 and development.
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.
Fourth, 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.