India’s oil and gas sector holds strategic importance in the economy as it meets around 42 per cent of the country’s primary energy demand and contributes over 15 per cent to the gross domestic product (GDP). With an interesting mix of private and government companies, the industry is scaling new heights in domestic and international markets.
With a strong resource position, India ranks second (behind Australia and ahead of Vietnam), in BMI’s upstream Business Environment ratings while the country shares first place with China in BMI’s downstream Business Environment ratings. The recently released BMI forecasts state that India will account for 12.4 per cent of Asia Pacific regional oil demand by 2015, while satisfying 11.2 per cent of the supply.
Due to increasing refining capacities, India is set to be a top exporter of petro-products in Asia, surpassing South Korea. India’s exports of refined products stood at 0.95 million barrels per day (b/d) as of June 2011 and US$ 4.6 billion worth of petroleum products were exported during July 2011.
Oil & Gas- Market Dynamics
Production and Consumption
According to the provisional production data released by the Ministry of Petroleum and Natural Gas, dated August 2011,
State oil firm Oil & Natural Gas Corporation (ONGC) has the onus to maximise domestic oil production, which in 2010 stood at 909,000 b/d of estimated average. Due to incredible efforts made by ONGC and UK-based Cairn Energy, BMI predicts oil production at around 1.2 million b/d by 2013 in its report for the third quarter of (Q3)_ 2011.
Oil consumption in India is projected to enhance by 4-5 per cent per annum to 2015, indicating a demand of 4.01 million b/d by 2015.
Diesel & Petrol
International Energy Agency (IEA) forecasts an increment of 3.8 per cent in India’s fuel demand led by diesel and petrol (gasoline). Diesel satisfies about 40 per cent of fuel consumption in India. Its demand is expected to increase to 1.37 million b/d in 2011 rising by 5.8 per cent and further to 1.44 million b/d in 2012, increasing by 5.5 per cent.
Demand for petrol is expected to expand by 7.6 per cent (363,000 b/d) in 2011 and eventually by 6.7 per cent (388,000 b/d) in 2012. For FY12, the ministry of petroleum anticipates a growth of 4.6 per cent in the sale of oil products.
Global consultancy firm McKinsey anticipates that natural gas demand in India is expected to increase from current 166 million standard cubic meters per day to 320 million standard cubic meters per day by 2015.
Moreover, BMI’s report for Q3 2011 states that India’s share (in the Asian pacific region) of gas consumption in 2010 was an estimated 10.9 per cent, while its share of production is estimated at 11.1 per cent. BMI expects that the country’s share of gas consumption would reach to 11.7 per cent by 2015 while that of supply would stand at 13.1 per cent.
Gas consumption is expected to increase from an estimated 55 billion cubic metres (BCM) in 2010 to 76 BCM in 2015, while domestic production is anticipated to increase from around 45 BCM in 2010 to at least 73 BCM in 2015.