(EnergyAsia, February 9, 2017, Thursday) — The Indian government plans to merge some or all of its 13 largest state-owned oil and gas companies with the objective of boosting the country’s long-term energy security.

After previous failed attempts at creating a giant state-owned firm, Finance Minister Arun Jaitley announced in early February that the government plans to soon consolidate its stable of oil companies to enable India to compete on the world energy markets.

The new firm would have the “capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for stakeholders,” he said.

While Jaitley did not name them, analysts say the country’s two largest oil companies, upstream player ONGC and downstream operator IOC, will head the merger list. Also on the hit list are Bharat Petroleum Corporation, Hindustan Petroleum, Gas Authority of India Limited (GAIL), Mangalore Refinery and Petrochemicals (MRPL), Chennai Petroleum, and Numaligarh Refinery and Oil India.

“Possibilities of such restructuring are visible in the oil and gas sector,” he said, confirming recent media speculation of the decision.

“We propose to create an integrated public sector ‘oil major’ which will be able to match the performance of international and domestic private sector oil and gas companies.”

An enlarged integrated company would have the heft to negotiate with governments and other companies for better terms and access to hydrocarbon resources to feed India’s energy appetite for its fast-growing economy.

However, Jaitley did not provide details as to how many companies might be merged and a timeline on when this might be achieved.

India has been struggling to increase its energy reserves and production while its primary energy consumption has been growing by nearly six percent a year over the past decade. According to BP, India’s oil reserves declined from 5.9 billion barrels in 2005 to 5.7 billion barrels at the end of 2015 to offset the growth in its natural gas reserves from 1.1 trillion cubic metres (tcm) to 1.5 tcm over the same period.

The government of Prime Minister Narendra Modi has set a goal of reducing the country’s oil import dependence from 80% in 2015 to 67% by 2020.

According to the Petroleum Ministry’s planning department, India’s oil products consumption surged by 8.8% to 192.8 million tonnes last year, making it the fastest growing among the world’s major countries. Between 2005 and 2015, its oil consumption grew by an annual average rate of 4.8%.

India’s bright economic outlook means its energy consumption growth will remain strong.

Citing the IMF, Jaitley said India’s GDP is expected to grow by 7.2% this year and 7.7% in 2018. The World Bank is even more bullish, with forecasts for the Indian economy to grow 7.6% in 2017 and 7.8% in 2018.

The oil industry has taken note, and has started to venture into India’s once-heavily protected downstream markets. Last October, Russia’s Rosneft and Switzerland-based Trafigura paid nearly US$13 billion to acquire Essar’s 20-million-tonne oil refinery and port facilities in Vadinar, and nation-wide chain of 2,700 retail stations. BP and Shell are also planning to expand into India’s downstream retail industry.