Indian Oil

The Indian Oil Corporation is India's largest corporation, the 18th largest petroleum company in the world, and was ranked 116 on Fortune magazine's 2008 Global 500. It is a public sector undertaking: an Indian term for a publicly traded company in which a majority share of the stock is government-owned (at any or all levels of government). Shares are traded on the two major stock exchanges of India: the Bombay Stock Exchange and the National Stock Exchange. A great many of the PSUs in India deal with energy or public transport. Like Indian Oil, its two main competitors are also PSUs: Bharat Petroleum and Hindustan Petroleum. The government's controlling interest in oil companies limits the circumstances in which and extent to which they can raise the price of fuel, which is compensated with subsidies.

Indian Oil products cover the spectrum of petroleum products: gasoline and diesel fuel, aviation fuel, [Page 850]lubricants, naphtha, bitumen, and kerosene, all under a variety of brand names and formulations. It also supplies liquefied natural gas to homes, and operates about 18,000 fueling stations throughout India. Indian Oil employs about 36,000 workers directly.

Subsidiaries and Refineries

Subsidiaries include the recently begun Indian Oil Technologies Limited (IOTL), a marketing firm that works with Indian Oil's Research and Development Center (IOR&D), based on a similar initiative at BP. IOTL and IOR&D share a headquarters in Faridabad. Lanka IOC is Indian Oil's Sri Lankan operation, offering many of the same services there that Indian Oil offers in India, with a recent history of friction with the Sri Lankan government (with whom Lanka IOC is a joint venture) over the issue of subsidy payments. The Chennai Petroleum Corporation and Bongaigoan Refiner and Petrochemicals Limited are similar joint ventures. Indian Oil has participated in several joint exploration ventures with other PSUs.

Indian Oil's refineries include Digboi Refinery, India's oldest refinery and the world's oldest continuously producing oilfield. Oil was discovered at Digboi, in northeastern Assam, in 1889 by the Assam Railway and Trading Company (ARTC), 30 years after the drilling of the world's first oil well, a result of the extensive worldwide search for black gold. Previous exploration of Assam had discovered the presence of oil below the surface, but the Digboi discovery led to the first commercial derrick, in the midst of the wilderness.

The ARTC began a separate company to carry out the drilling at Digboi, which soon became the Assam Oil Company. At the time, such enterprises were still operated and managed by the British, with native labor and middle-management. It may have been the British experience with delegation, at the height of their imperial presence in the world, that led the London-based ARTC to spin off its oil concerns into a separate company, devoted to oil instead of making it one of many multilateral pursuits; at the time, the Assam Oil Company was not unique in its focus but was uncommon.

The Digboi success led to intensified exploration of India, as the potential for reward had been proven. In the coming decades, Royal Dutch Shell and the Anglo-Iranian Oil Company (ancestor of BP) applied for licenses to search for and exploit petroleum resources in India, and the country now has many oil companies, both PSUs and in the private sector. The Assam Oil Company was acquired by Indian Oil in 1981, and is now operated as a division of the larger company; Digboi remains one of the company's most important refineries.

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