The article, ‘Privatisation and petroleum: Let’s resurrect an old question’ by Vikram S Mehta (IE, August 3) asks whether India should privatise the Oil and Natural Gas Corporation (ONGC) and Oil India Limited amid the recent geopolitical uncertainties. It also brings out the need for strategic petroleum reserves (SPR). These are two important and independent questions, but the column treats the continuity of ONGC and OIL as state-owned entities and SPR as an either-or question. There appears to be a misplaced underlying assumption that government ownership of these Maharatnas stands between India’s energy security and the need to create a resilient energy supply ecosystem. I argue for both a strong PSU presence in India’s upstream oil and gas sector and the expansion of strategic petroleum reserves to withstand potential supply disruptions.

The column argues that finding costs in ONGC’s focus areas in the Godavari, Mahanadi and Andaman basins could be as high as $60-80 a barrel. With forward Brent near $70, even a discovery may not be commercially viable, it states. A barrel in the Andaman deep water that’s not commercially viable at $70 for PSU oil companies will not be viable for the same amount for a private entity. Geology and the forward curve are indifferent to the shareholding pattern. In fact, a nation may be better placed to withstand such crises when strategic assets are controlled by PSUs. Governments can use them to pursue broader national objectives, whereas private companies are ultimately guided by shareholder interests and the bottom line.

Finding cost links two variables: Expenditure on exploration and the size of the discovery. But once exploration is complete, investment decisions are based on the discovery’s size, expected future capex and opex, and anticipated........

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