Trust market returns to secure oil: India owns stakes in oilfields from Russia to Abu Dhabi, but getting that crude home is another challenge

Indian state-owned oil companies have invested more heavily in Russian oilfields than anywhere else overseas. Yet, when the Hormuz Strait shut in March, Russian crude that domestic refiners bought came from the open market, not from those investments. Their stakes gave them no special claim to the oil.

India's policymakers have long projected overseas oil and gas investments as a pillar of energy security. The US-Iran and Russia-Ukraine wars call for a closer look at what those investments can guarantee. Terms of India's Russian investments illustrate the distinction.

ONGC, IndianOil, BPCL and Oil India collectively hold a 49.9% stake in the company operating Vankor Field in eastern Siberia. IndianOil, BPCL and Oil India also have a 29.9% interest in Taas-Yuryakh. Both investments were made in 2016. These stakes entitle companies to dividends, not a contractual share of oil produced.


ONGC's 20% participating interest in Sakhalin-1, acquired in 2001, was different. It originally gave the company the right to lift and independently sell its share of production. After Russia's 2022 invasion of Ukraine, sanctions disrupted operations and Exxon exited as operator. Moscow transferred the project to a new Russian entity, in which ONGC received a 20% stake in December 2025, but lost the right to lift oil. An investment that once offered direct access to physical crude became a dividend-generating asset.

The Ukraine war exposed another risk: hundreds of millions of dollars in dividends owed to Indian companies from Vankor and Taas-Yuryakh fields were trapped in Russia by capital movement restrictions. A right to lift oil doesn't guarantee it will come home. An Indian consortium of ONGC, IndianOil and BPCL acquired a 10% stake in Abu Dhabi's Lower Zakum concession in 2018. Yet, its oil is generally sold to traders through annual arrangements.

Indian refiners find it more economical to buy from the open market than insist on taking equity oil. That is a commercial choice, not necessarily a failure of supply security. Equity oil is not automatically cheaper or more useful to a refinery.

Early in the Ukraine war, ONGC sold some Sakhalin crude to BPCL and HPCL. But refiners struggled to bring it to India because sanctions made insurance unavailable. The US war on Iran added another constraint: soaring freight costs are pushing refiners towards geographically closer suppliers. Even with lifting rights, sanctions, insurance constraints and shipping costs can make delivery difficult or uneconomic.

Suppliers, traders and shippers have continued to navigate war and sanctions to deliver Russian and Gulf crude to Indian ports. Their willingness to do so underscores the market's capacity to redirect available oil when routes are disrupted. This doesn't mean the market can overcome every disruption - or that overseas investments play no supporting role. But in the Hormuz crisis, the immediate answer came through market purchases, not preferential access to Indian-owned fields overseas.

The lesson is that overseas ownership, a contractual right to lift, and ability to deliver crude are three different things. An investment's contribution to physical supply security depends on the host government's approach, geopolitics, sanctions, shipping and insurance, freight costs, and market prices. The entire chain must work for oil to reach an Indian refinery at a viable cost.

This is not an argument for abandoning overseas investments. They can generate attractive returns, diversify portfolios, provide access to tech and deepen relationships with producing countries. Of late, India has slowed such investments as state-owned companies grow wary of long-gestation projects whose returns could be eroded by energy transition.

Indian companies' share of overseas oil and gas output peaked at 24.7 MMtoe in 2018-19, and fell to 19.2 MMtoe in 2025-26, reflecting ageing fields and limited fresh investments. That is, overseas output is less than 1/3rd of domestic output (62.7 MMtoe in 2025-26), with the latter only about 20% of India's oil and gas consumption.

About half of current overseas output comes to ONGC, which doesn't operate a refinery. Where it has lifting rights, it must sell at market prices, even to domestic refiners. That does not necessarily make the crude more attractive to an Indian refinery. Which is why companies and policymakers should assess commercial returns on overseas investment separately from any claimed energy security benefit.