In the post colonial period India wanted to establish its national identity through rapid economic development under state control. The future development of all the major industries including petroleum was put under state sector. But the government had to depend on foreign capital and technology to achieve the desired growth. The aspiration of self-reliance and simultaneous dependence on foreign economic interest had resulted in a relation of conflict and cooperation between the state and foreign interests. In the present study on 'State and Foreign Involvement in the Development of Indian Petroleum Industry Between 1970 and 1989', an attempt has been made to address a few major issues relevant to the petroleum industry of that period. The following issues have been identified for detailed analysis: (i) Performance of public sector oil companies in production, distribution and marketing of petroleum, (ii) Role of the state during the global petroleum crisis of 1970s, (iii) Influence of foreign interests on the petroleum policy of the Government, (iv) Involvement of foreign companies at different operational stages of the industry, (v) Participation of Indian private companies in the industry during the 1980s and (vi) Self sufficiency attained by the industry in terms of technology, equipment and services.The performance of the national companies in production of crude was controversial. Over exploitation of the basins during late eighties, when international crude price was lower than the domestic crude price, had proved costly to the nation in the long run. Moreover, reliance on few proved basins had kept other potential basins unexplored. In refining the state had consolidated their control through nationalization of foreign refineries. Existing public sector refineries were expanded and few more were also built. Apart from the conflicts between the state and foreign companies, the other two major reasons for nationalization of foreign companies were trade union pressure and realignment of the world market among oil majors which resulted in strategic pullout of few US companies from refining and marketing activities of this subcontinent. In transportation activities, the state exercised almost total control on crude transportation which was vital for efficient functioning of the refineries. An elaborate distribution network was established throughout the country for distributing petroleum products. Through efficient marketing efforts, national companies had successfully established petroleum as the major source of commercial energy. However, proper utilization of natural gas which was abundant in supply could not be made due to lack of proper marketing policy. The study also reveals that national companies and research organizations had failed to make any breakthrough in petroleum research. In technical consultancy service, efforts to reduce dependence on foreign companies did not succeed.It has been observed that in spite of the national efforts to evolve an independent identity, the state policies on Indian petroleum sector were influenced by external factors. India’s decision to explore mainly the offshore basins without proper assessment of onshore capability was not based on technical and economic logic. In offshore exploration and production, the state had to depend more on foreign assistance due to lack of indigenous expertise in that area. The World Bank had a strong influence on the choice of refining technology and transportation pricing policies of the government. Improper refining technology had created product imbalance in the country resulting in import of substantial amount of crude and petroleum products. The Bank had formulated the freight rates for Indian marine tankers which made the tanker industry inefficient and uncompetitive. On the demand side, the state followed a petroleum consumption policy similar to the policy followed by the European states after the Second World War. The marketing strategy of the national oil companies had made petroleum, a scarce resource, the most popular energy, replacing coal which was abundant in India. Thus the entire economy became almost dependent on petroleum. That was not a rational choice considering the limited reserve of petroleum resources in the country.For the development of indigenous industry, government followed the British experience in offshore development of their North-Sea project. Since eighties, the government took active initiative to involve more and more indigenous companies both public and private in different operational activities of the industry. Few Indian companies had entered into the industry primarily as local partners to their foreign collaborators. A beginning had been made towards indigenization of equipments, materials and services. However, due to lack of research activities, almost all the critical technology was imported.The thesis concluded that during the period of the study (1970-89), apart from few minor conflicts, there existed a relation of cooperation between the state and foreign interest in the development of Indian petroleum industry.
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