The ongoing turmoil in the oil markets due to the pandemic and underutilized supply, presents a long-term opportunity for India to secure its energy future. It can take small stakes in the listed oil and gas companies of stable Western democracies like the U.S., Canada and Australia, through a specially-created sovereign wealth fund. This will allow India to be better prepared for the era when prices rise again.
India’s investments in energy thus far have concentrated on buying stakes in oilfields in developing countries often at the risk of political unpredictability. With oil prices, and therefore oil company values, falling – India should revise this strategy and aim for better value and lower risk by making investments in companies in the developed world. This paper recommends investing in oil and gas assets in energy-rich developed countries like the U.S., Canada and Australia, to reduce India's vulnerability to future increases in energy prices. These should be made via a sovereign wealth fund (SWF), not the national oil companies. The SWF will be best served by acting as a financial investor, acquiring, only minority stakes, rather than aiming for management control.