Best Oil & Gas Stocks in India

12 January 2023
10 min read

The Oil and Gas Sector is fraught with a variety of serious risks. Three of these risks are the risk of volatile commodity prices, the potential for companies that pay dividends to stop paying them, and the potential for an oil spill or other accident during the extraction of Oil or Natural Gas. Long-term investments in oil and gas companies, however, can also be very lucrative. Before making investments in the industry, investors should fully understand the risks.

Energy investors are unsure whether Oil and Natural Gas companies, even the most well-known ones, are wise investments at the moment because of the significant volatility the oil and gas sector has seen over the past few years.

Let us explore the Oil and Gas Sector in more detail in this blog and learn more about the Indian Oil and Gas Industry as well as the top Oil & Gas Stocks in India.

The Indian Oil & Gas Sector: A Synopsis

Future GDP growth will be primarily driven by the Oil and Gas Industry, which has been identified as a key indicator. Investment in Oil and Natural Gas is profitable from an economic and financial standpoint, with promising prospects in India. Future major investments in this sector are obvious given the rising requirement for crude oil in India and its extensive use in both domestic and industrial activities.

In order to attract foreign investment, the Indian government has recently updated the regulatory regime in the upstream sector (moving from NELP to HELP), which is also consistent with the government's goal to make doing business in India easier. The Oil and Natural Gas sector promises to have a dynamic landscape with room for business entity growth while the Government of India works to address teething problems.

Best Oil & Gas Stocks

Let us review the top Indian Stocks in the Oil and Gas Sector now that we have a better understanding of this industry.

Sr. No. Company Name
1 Oil India
2 Oil & Natural Gas Corporation
3 Hindustan Oil Exploration Company
4 Deep Energy Resources
5 Reliance Industries
6 Jindal Drilling & Industries
7 Petronet LNG
8 Selan Exploration Technology
9 Asian Energy Services
10 Bharat Petroleum Corporation

Factors to Consider Before Investing in Gas & Oil Company Stocks

  1. Cyclical Sector: The Oil and Gas industry is frequently cyclical, which means that investors can anticipate booms and busts.
  1. Fluctuations & Volatility: There are outside influences that Oil and Gas companies must deal with. Oil and Gas prices play a significant role in how much Oil and Gas stocks are valued. These stocks frequently experience market punishment when prices are low. For example, stock prices in the Oil and Gas industry fell when Saudi Arabia and Russia started an oil price war in March 2020, which drove down crude prices globally.
  1. Unpredictability: Exploration for Oil and Gas is unpredictable. An organization purchases the privileges to an exploratory block and runs tests to see if there are any Oil or Gas deposits there. Before making any money, if they are discovered, the business drills test wells to assess the quality of the deposits and production wells and connects the related infrastructure. Exploration is inherently uncertain, which can lead to significant losses from unsuccessful investments.
  1. Environmental Concerns: The manufacturing, transportation, and combustion of fossil fuels release greenhouse gasses that contribute to climate change. Thus, government agencies are putting more pressure on businesses to reduce carbon emissions in their operations, and it is likely that the demand for Petroleum and Natural Gas will decline over the next few decades.

Top Listed Oil & Gas Companies in India 2023: An Overview

Oil India

A central public sector enterprise, Oil India Limited (OIL), is owned by the Indian government's Ministry of Petroleum and Natural Gas. Its operations are supervised by the Ministry of Petroleum and Natural Gas, which has its main office in Duliajan, Assam. With offices in Noida, Uttar Pradesh, Guwahati, and Jodhpur, the centralized public sector undertaking is a Navratna.

Distinct exploration and manufacturing (E&P)-related services are offered by Oil India Ltd. Its ownership stake in Numaligarh Refinery Limited is 26%. Oil India Ltd. transports crude oil, makes liquefied petroleum gas, provides pipeline services, and provides a range of services related to exploration and production. The Government of India owns 66.13% of the company's total issued and paid-up capital, according to the company website. The remainder of the equity capital, or 33.87%, is held by the public, mutual funds, corporations, banks, residents, etc. For its E&P activities, OIL has more than 1 lakh sq. km of PEL/ML areas, the majority of which are in the Indian North East. This explains all its crude oil production as well as the vast majority of its gas production. Rajasthan contributes 10% of the nation's overall gas production.

Oil & Natural Gas Corporation

Oil and Natural Gas Corporation Limited, also known as ONGC Limited, is one of India's top oil and gas firms. Its activities include energy exploration, production, refinement, and development. The central public sector enterprise, the Oil and Natural Gas Corporation (ONGC) is owned by the Ministry of Petroleum and Natural Gas of the Government of India. The company's headquarters are in New Delhi.

The Indian government established ONGC on August 14, 1956. It is a major government project, and the Ministry of Petroleum and Natural Gas is in charge of managing its operations. It is the largest government-owned oil and gas explorer and producer in the nation and produces about 84% of India's natural gas and about 70% of its crude oil, which corresponds to about 57% of the nation's total demand.

Hindustan Oil Exploration Company

Oil exploration and production are both activities carried out by the Hindustan Oil Exploration Company Limited. The Company owns a participating interest in nine oil and gas fields in India's Cambay, Cauvery, Assam Arakan, and Rajasthan basins that are at various stages of exploration, development, and production.

The Ministry of Petroleum and Natural Gas is in charge of the operations of Bharat Petroleum Corporation Limited (BPCL), the second-largest government-owned downstream oil producer in India. On the 2020 Fortune list of the largest public sector organizations in the world, it came in at position 309, and on Forbes' 2021 "Global 2000" list, it came in at position 792.

Deep Energy Resources

The Oil and gas company, namely Deep Industries Ltd. has business interests in drilling, work-over, air and gas compression, as well as oil and gas exploration and production. The business is a pioneer in the oil and gas industry's service sector, particularly in gas compression services.

The company also performs turnkey contract compression, which entails the provision of equipment as well as the commissioning, installation, and maintenance of a gas engine driven compressor package. For the supply of gas compressor packages in India, they have partnered with reputable and knowledgeable businesses like Valerus Compression Services, Houston Texas, and Hanover Company USA. They also have technical support for a variety of services in the oil and gas industry.

Reliance Industries

With its headquarters in Mumbai, Reliance Industries Limited is a multinational conglomerate company in India. Energy, petrochemicals, natural gas, retail, telecommunications, mass media, and textiles are just a few of the many industries it is involved in. One of India's most profitable businesses, Reliance is also the country's biggest publicly traded business in terms of market capitalization and revenue. With over 236,000 employees worldwide, it is also one of the largest employers in India.

As of 2022, the company is listed as the 100th largest corporation in the world on the Fortune Global 500 list. With 7% of all Indian merchandise exports and access to markets in more than 100 nations, Reliance is still India's top exporter. Nearly 5% of all customs and excise duty revenue received by the government of India comes from Reliance. Additionally, it is India's largest private sector income taxpayer.

Jindal Drilling & Industries

With operations dating back to 1989, Jindal Drilling & Industries Limited (JDIL), a division of the D.P. Jindal Group that specializes in offshore drilling, is one of the top Indian private sector companies in this industry. Around 30 years of operational experience, backed by a skilled staff and crew, are to JDIL's credit. They are proud to say that JDIL's workforce is its greatest investment due to its expertise in every aspect of the oil and gas sector, impeccable service quality, and wealth of knowledge.

The company's performance can be regarded as excellent according to them because it has frequently received awards, including the exceptional international safety award for "No Lost Time Accident" from the "International Association of Drilling Contractors, Houston (USA)" for Safety Excellence. This was given in recognition of the company's strict safety protocols in this high-tech industry. JDIL has logged two years without a lost-time accident, which is an Indian record. Trade Leaders Club-Madrid, SPAIN has recognized the company's overall policy and given it the International Award for the "Best Trade Name 1996."

Petronet LNG

The government of India established the Oil and Gas company called Petronet LNG Ltd. to import liquefied natural gas (LNG) and establish LNG terminals in the nation. The Gas Authority of India Limited (GAIL), Oil and Natural Gas Corporation Limited (ONGC), Indian Oil Corporation Limited (IOC), and Bharat Petroleum Corporation Limited are partners in the joint venture (BPCL). One of the energy-related businesses in India, Petronet LNG Limited, has built the nation's first LNG receiving and regasification terminal in Dahej, Gujarat, as well as another terminal in Kochi, Kerala.

The government of India established a joint venture with the country's top oil and natural gas producers to import LNG and build LNG terminals. Oil & Natural Gas Corporation Limited (ONGC), GAIL (India) Limited (GAIL), Indian Oil Corporation Limited (IOCL), and Bharat Petroleum Corporation Limited are its promoters (BPCL). The authorized capital is approximately $420 million, or ₹3,000 crores.

Selan Exploration Technology

In India, Selan Exploration Technology Limited conducts Oil and Gas exploration and production. The company is authorized to develop oil fields in Gujarat's Bakrol, Lohar, and Karjisan oil and gas fields. In India's Gurugram, Selan Exploration Technology Limited is headquartered. Selan Exploration Technology Ltd., founded in 1985, is a small cap business with a market cap of Rs. 431.68 billion that operates in the gas and petroleum industry. An oil exploration and production company with a private market listing is Selan Exploration Technology Ltd. Additionally, the business and the GOI have agreed to two more Production Sharing Contracts for newly discovered oil fields in Gujarat. Oil, gas, and hydrocarbon exploration are the company's main activities.

Asian Energy Services

For Indian oil and gas exploration companies, Asian Oil Field Services Limited (AOSL) offers exploration services. The company has worked on numerous seismic data acquisition, seismic job services, shot hole drilling, up hole drilling, and workover projects since its inception. It has also provided work over services to numerous national and private companies in India. Seismic Data Acquisition, Data Processing, Seismic Job Services (Field Operations, Maintenance), and Shot Hole Drilling are just a few of the services provided by the company.

Bharat Petroleum Corporation

The Ministry of Petroleum and Natural Gas, Government of India, is the owner of the central public sector enterprise known as Bharat Petroleum Corporation Limited (BPCL). It runs refineries in Mumbai, Kochi, and Bina. The Ministry of Petroleum and Natural Gas is responsible for overseeing the operations of BPCL, which is the second-largest government-owned downstream oil producer in India. It came in at 309 on the 2020 Fortune list of the largest public sector organizations in the world and at 792 on the 2021 Forbes "Global 2000" list. The Corporation works in India's petroleum sector. The Corporation is in the business of marketing petroleum products and refining crude oil.

Conclusion

In conclusion, since renewable Energy Stocks have been rising for decades, investing in Oil and Natural Gas stocks in India will enable you to earn fruitful results in the near future. Prior to actually investing in petroleum shares, one should consider risk tolerance because the stocks in the oil sector are very volatile. Before purchasing any stocks or investing in Natural Gas and Oil Company Stocks, be sure to consider your investment goals, risk tolerance, and time horizon.

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here

Research Analyst – Himanshu Sinha

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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