TN PETRÓLEO

If there is one thing India needs, it is oil. As the country grows richer, India`s thirst for energy is expected to rise exponentially - its current per capita energy consumption is only about one third that of the global average, according to KPMG. To help meet this need, the government has loosened the grip of state-run companies over oil and gas exploration by holding six rounds of competitive tenders for exploration blocks.

This has been successful in bringing in aggressive private domestic operators, such as Reliance Industries. But so far, while the global oil majors have shown an interest, they have yet to make a significant investment in the domestic industry.

This is partly because the prices paid for blocks were seen as high and there are better opportunities elsewhere, in more oil-rich countries. But it is also because regulation on the ground is sometimes seen as open to interpretation. Under its original contract with Cairn India, the only significant foreign investor in the country`s upstream oil and gas production sector, the state had committed to provide the facilities to help deliver oil from the UK-based operator`s Rajasthan fields to the market.

Now the company is facing costly delays because of last-minute negotiations with the government over how this should be done. How this dispute plays out may determine the sort of foreign investor interest India attracts in the future.