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Can India take advantage of low oil prices?

The global drop in oil prices has had a detrimental impact on some markets, with uncertainty permeating the sector and creating a headache for many countries, but some countries look poised to benefit from the fall.

One of these is India, which has looked on as the days of $100 a barrel - driven by a major gap between demand and supply - have given way to an influx of oil into the market, driven by greater exploration in both the east and west.

As a major importer of oil, this has been hugely beneficial to India, but it does not stop there, as the fall in prices is also creating new opportunities for the nation to significantly expand its presence on the global oil and gas stage.

As a result of low prices, the values of some oil companies have fallen by as much as 50 per cent, providing an opportunity for certain countries and organisations to invest in their future and safeguard against future oil prices rises by acquiring new assets.

New opportunity

As Asia's third largest economy, the Indian government and its major companies are keen to hedge against any and all developments that would see them worse off, and so now could be the time to turn to an acquisition - with some analysts speculating that the Russian state-owned company Rosneft would be one target.

Despite being one of the largest oil companies in the world, with oil and gas production of five million barrels per day (compared with, India’s state-owned ONGC, which has a daily oil production of 1.13 million barrels a day), the opportunity is still there for India.

This is mainly due to the fact that the market capitalisation of ONGC is $46.8 billion, while Rosneft's stands at just $34.8 billion due to the economic sanctions placed on Russia.

When combined with the fact that India is saving more than $60 billion a year due to oil prices falling from $100 a barrel to just over $50 a barrel, the capital for an acquisition is in place and the time is ripe to take advantage.

With ONGC having total petroleum reserves of 7.1 billion barrels and Rosneft's standing at 43.33 billion barrels, there has arguably never been a better time for India to safeguard its oil and gas future and declare itself a key player in the global market.

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