Best Oil & Gas Stocks in India

In this article, we will discuss

• An Overview of the Indian Oil and Gas Sector
• The Best Oil & Gas Stocks in India in 2024
• Conclusion

The Indian oil and gas sector plays a crucial role in the nation's economic growth. With India firmly among the world's largest energy consumers, fossil fuel demand is always high. Such unshakeable affinity towards these fossil fuels could potentially propel the growth of oil & gas stocks, especially when combined with the Indian government’s push towards self-reliance in the sector.

By investing in the right oil & gas stocks in India, you can effectively leverage the wealth-creation potential of the sector and fulfil your financial objectives. In this article, we are going to focus on the Indian oil and gas sector and explore some of the best stocks that you can consider investing in.

An Overview of the Indian Oil and Gas Sector

Of late, the Indian oil and gas sector has been growing at a steady rate. Currently, the country is the fourth-largest refiner in the world and the largest exporter of petroleum products in Asia.

The nation's energy demands are also growing steadily, as evidenced by a 6.1% growth (Y-O-Y) in the consumption of petroleum products and a 6.4% increase (Y-O-Y) in the consumption of natural gas as of April 2024.

To meet the ever-growing energy demand, the oil and gas sector is ramping up efforts to increase production. In 2022, 8 new oil and gas blocks were carved out, with plans to enhance the exploration area by an additional 1 million square kilometres by 2030.

On the back of an increase in crude oil processing ability and petroleum product production by 0.8% (Y-O-Y) and 3.9% (Y-O-Y) as of April 2024, the sector is planning to further increase its refining capacity to 450 million metric tonnes per annum (MMTPA) by 2030.

With more than 177 projects worth over $86.62 billion in the pipeline, investing in oil & gas stocks could potentially prove to be highly lucrative, especially in the long run.

The Best Oil & Gas Stocks in India in 2024

The Indian oil and gas sector is heavily populated, with many companies vying for a major piece of the market. This could make selecting the right stocks for investment highly challenging. To make your stock selection process easier, we have compiled a list of the best oil and gas stocks you can consider investing in.

Note: All of the values in the table are valid as of June 19, 2024.

Now that you have a fair idea of some of the top oil & gas stocks in India, let us now explore each of these companies in more detail.

• Reliance Industries Limited

Reliance Industries Limited (RIL) is one of the largest conglomerates in India, with a significant presence in the oil and gas industry. The company is involved in the exploration, production, and refining of crude oil and natural gas.

Furthermore, Reliance Industries also manufactures petrochemicals and other petroleum-related products. The company owns and operates the world's largest integrated refining complex in Jamnagar, Gujarat. The Jamnagar refinery alone accounts for about 1.5% of global crude processing. In addition to this, RIL also has 14 other manufacturing facilities in India and Malaysia.

Reliance Industries’ strong track record of growth and exceptional financial stability make it one of the best investment options for those looking to invest in the growing Indian oil and gas sector.

• Oil & Natural Gas Corporation Limited

Oil & Natural Gas Corporation Limited (ONGC) is India's largest oil and gas exploration and production company. Owned by the Government of India, the company has a strong domestic and international presence.

The company’s asset portfolio is diverse, with over 32 offshore and onshore oil and gas fields across 15 countries. ONGC accounts for about 70% of crude oil production and about 84% of natural gas production in India. has been at the forefront of India's energy security efforts.

In addition to oil and gas exploration and production, the company is also involved in midstream and downstream activities such as refining, petrochemical production, and power generation. ONGC has a good track record of revenue growth and profitability, making it another one of the top oil company shares to invest in for the long term.

• Petronet LNG Limited

Set up by the Government of India, Petronet LNG Limited (PLL) is India's largest liquefied natural gas (LNG) importer and distributor. One of the major milestones of PLL is the LNG facility at Dahej, Gujarat, which is the country’s first LNG receiving and regasification terminal with a total capacity of 17.5 MMTPA. The company is planning to expand its total LNG capacity to 22.5 MMTPA shortly.

Petronet LNG Limited also has another smaller LNG terminal in Kochi, Kerala, with a total capacity of 5 MMTPA. PLL is currently one of the best gas stocks in India, especially since the company is actively exploring expansion opportunities, both within India and in international markets.

• Indian Oil Corporation Limited

Another Government of India enterprise, the Indian Oil Corporation Limited (IOCL), is India's largest oil refining and marketing company. The company’s primary business vertical is the refining of crude oil into various grades of petroleum products, such as petrol, diesel, liquefied petroleum gas (LPG), and aviation fuel.

In addition to refining crude oil, IOCL also markets its petrochemical products under the Indian Oil and Indane banners. The company currently has nine active refineries in Digboi, Barauni, Vadodara, Guwahati, Haldia, Mathura, Panipat, Bongaigaon, and Paradip. Indian Oil Corporation Limited also manufactures a wide range of petroleum-based lubricants and greases under the ’SERVO’ brand, which is incidentally the country’s largest lubricant brand.

• Bharat Petroleum Corporation Limited

Bharat Petroleum Corporation Limited (BPCL) is India's second-largest oil refining and marketing company. The business model of BPCL is very similar to that of its competitor, Indian Oil Corporation Limited. The company is actively involved in the refining of crude oil into aviation fuel, petrol, diesel, and LPG. The refined petroleum products are then distributed through the company’s outlets under the Bharat Petroleum and Bharat Gas brands.

Currently, Bharat Petroleum Corporation Limited has three major refineries in Mumbai, Kochi, and Bina, with a total crude oil distillation capacity of more than 38 MMTPA. Apart from crude oil-based fuels, BPCL also produces lubricants, engine oils, and greases under the MAK Lubricants brand. Bharat Petroleum Corporation Limited is well-known for its various environmentally friendly practices, making it one of the best oil stocks in terms of sustainability.

• Hindustan Petroleum Corporation Limited

Also owned by the Government of India, Hindustan Petroleum Corporation Limited (HPCL) is India's third-largest oil refining and marketing company. The company operates two major refineries in Mumbai and Visakhapatnam and has an extensive network of retail outlets across the country.

Through its retail outlets, HPCL markets various crude oil-based fuels, such as petrol and diesel. The company also produces and distributes different grades of engine oil, transmission oil, coolants, brake fluids, lubricants, and greases.

The current refining capacity of HPCL’s Mumbai and Visakhapatnam refineries is 9.5 and 13.7 MMTPA, respectively. The company is currently planning to expand the capacity of the Visakhapatnam complex to 15 MMTPA in the near future. Additionally, there are also plans to construct a petrochemical complex in Balotra, Rajasthan, with a capacity of 9 MMTPA.

• GAIL (India) Limited

Among the seven Maharatna Public Sector Undertakings (PSUs), GAIL (India) Limited is India’s largest natural gas company.GAIL is involved in the transmission and distribution of natural gas, as well as the manufacturing of petrochemicals and other energy-related products. The company has a strong city gas distribution (CGD) network in Varanasi, Patna, Ranchi, East Singbhum, Kordha, and Cuttack.

GAIL (India) Limited supplies piped natural gas (PNG) to households for domestic consumption and compressed natural gas (CNG) for domestic and commercial automotive use through its very own outlets. The company is also betting big on renewable energy and currently generates about 117.95 MW of electricity from wind energy generation and around 10.76 MW from solar energy. GAIL (India) Limited is one of the few gas stocks in India to have such a strong foothold in the natural gas distribution market.

• Adani Total Gas Limited

A major private sector player in the natural gas industry, Adani Total Gas Limited is a joint venture between the Adani Group and Total Energy. The company is involved in the business of piped natural gas and compressed natural gas distribution. Adani Total Gas Limited distributes both PNG and CNG for residential, commercial and industrial usage.

The company’s city gas distribution networks are currently operational in Ahmedabad and Vadodara in Gujarat, Faridabad in Haryana, and Khurja in Uttar Pradesh. In addition to this, Adani Total Gas Limited has bagged the rights to develop CGD networks in Allahabad, Chandigarh, Daman, Ernakulam, Panipat, Udhamsingh Naga, and Dharwad as well. With so many projects in the pipeline, Adani Total Gas Limited is one of the many attractive gas stocks for long-term investment.

• Gujarat Gas Limited

Gujarat Gas Limited (GGL) is India's largest private-sector gas distribution company. The company is involved in the distribution and retailing of natural gas, as well as the manufacturing of gas-related products. GGL supplies natural gas in the form of PNG and CNG for domestic, commercial, and industrial usage.

The company has one of the most extensive compressed natural gas networks in India, with over 808 refuelling stations. In the case of piped natural gas, Gujarat Gas Limited is currently the largest network in the country, with active supply stations in more than 7 states. The company is focusing on expanding its infrastructure and improving operational efficiency, making it one of the most attractive oil and gas stocks in the sector.

• Confidence Petroleum Limited

Confidence Petroleum Limited (CPL) is a fast-growing private sector entity involved in the business of bottling and distributing liquid petroleum gas (LPG) and compressed natural gas (CNG). The company currently has around 15 high-pressure gas cylinder manufacturing plants, more than 68 gas bottling plants, over 250 automobile LPG dispensing stations, and above 35 CNG dispensing stations.

CPL distributes LPG and CNG for both domestic and commercial usage under the ‘Go Gas’ brand and is one of the first entities to have come up with the concept of fibre-body composite gas cylinders. Confidence Petroleum Limited is among the most attractive small-cap oil & gas stocks in India, with good valuations and a strong potential for growth.

Conclusion

The Indian oil and gas sector provides a wide range of investment opportunities for all kinds of investors. However, before you invest in any company, it is advisable to conduct thorough research and consider the various risks and potential volatility associated with the industry. This way, you can make informed investment decisions, effectively capitalising on the various promising opportunities that the sector has to offer.

That being said, to invest in a stock, you need to have an active demat account. If you don’t have one already, you can open a demat account with Samco Securities. With Samco, you get a feature-rich trading and demat account with a host of benefits ranging from no opening charges to zero Account Maintenance Charges (AMC) for the first year.

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