The landmark Reliance Industries-BP deal, for an initial $7.2 billion, billed as the largest single foreign direct investment in the country, could not have been at a more opportune moment. Apart from its benefits for the two players directly involved, it has a wider implications for the country as a whole. For one, it shows global oil giants need India, particularly in the current geopolitical turmoil roiling the entire belt from Libya to Afghanistan; that the Cairn-Vedanta holdup has in no way dimmed this country as an oil-gas exploration destination; that the new exploration licensing policy is no longer a benchmark that reflects India’s potential to attract big names; and, most significant, that ONGC and Oil India should gear up and devise a strategy to increase production from their oilfields and not be content with enjoying high crude prices.

India, which has to import 70-80 per cent of its oil needs, cannot depend forever on West Asian oil. One report claims that our demand for oil will grow by 115 per cent in the next 20 years. This cannot be met by fossil fuels alone. ONGC, Oil India and Gail will have to work seriously to develop alternative sources of fuel and renewable energy. This is still negligible in India, though the scope for solar, geo-thermal and wind energy is immense. It would be such a waste if we fail to make effective use of the natural resources we already possess to generate power. And while we cannot go back to the Indira Gandhi mantra of “self-reliance” in its entirety, mainly as today’s globalised world bears little similarity to the India of the 1970s-’80s, the public sector oil giants would do well to treat the Reliance-BP deal as a wake-up call. Perhaps the new oil minister could get them to pool both resources and expertise to devise future exploration and exploitation strategies. Reliance and BP together is a formidable combine, and the Indian consumer will only benefit if it is kept on its toes by aggressive competition.
BP has got access to a big chunk (30 per cent) of a significant hydrocarbon area on India’s east coast known as the KG Basin, of which it will certainly take utmost advantage. It has the best of technology at its command, and this will presumably be available to RIL, which had reached a plateau as far as deep sea drilling is concerned.
The West Asian and Arab region, in which Western oil giants have immense investments, is now in a troubled state; India — by default — appears calm, stable and comparatively peaceful as an investment destination. The BP deal could well herald additional FDI across sectors. Commerce minister Anand Sharma recently advised retail giants like Wal-Mart, which are extremely keen to enter India, to first put up infrastructure such as warehousing and cold storages before being permitted entry into retail proper. This sounds fair, and with the West’s options somewhat narrowing, the prospect of more FDI looks bright. At the same time, the government needs to keep up its resolve to rigorously monitor all major investments to ensure the country’s interests are protected, and not be influenced by campaigns by large multinationals. It is in fact to its credit that the government has so far managed to resist the subtle propaganda that it is blocking proposals that would benefit the people of this country, and stood firm in insisting that all deals must be transparent and follow the due processes of law.