In the upstream segment, supply from the domestic market caters 30% of the total demand for crude oil in the country. The supply of the crude is largely met through import. In the downstream segment, refining has seen significant capacity addition in the recent past. Lack of logistics support can hamper the large-scale export potential of the products.

In the past, we have seen a fair degree of correlation between the growth in petroleum products and the growth in the overall economic activities. Thus demand will be in line with economic growth.

In the upstream segment, government permission is required to commence operation. Finding, exploration, development and production cost of oil fields are significant, thus barriers are higher. The new players wanting to enter the retail segment need to pump in a minimum of Rs 20 bn in the sector as eligibility criteria.

High, since crude availability of country is only about 30% of the requirement. OPEC, a group of major oil producing countries, has a great bargaining power. For the petroleum products on the other hand, given the surplus capacity in the country and the commodity nature of the product, the bargaining power is on the low.

In the upstream segment, government allocates the crude oil produced by the players. Thus, in an indirect way acts as a bargaining arm for OMCs. In the downstream segment, the standalone refineries had to share the subsidy burden. On the retail front, government acts as a strong bargaining arm of customers, with OMCs having to sell the sensitive petroleum products at losses. In the industrial and consumer segment, the competition is moderate and is expected to intensify with the increase in the refining capacity of the country.

Upstream segment has been made competitive with introduction of NELP, however the dominance of ONGC in the segment will continue for some time to come. In the downstream segment, increased action is expected in product pipelines and city gas distribution.