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Oil and Gas

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Oil and Gas Industry in India

March, 2013

Introduction

Indian oil and gas (O&G) sector marked its emergence way back in the late 19th century, when the oil was first struck at Digboi in Assam in 1889. Since then, the sector has not seen back and has emerged as one of the core sectors for the country's economy.

India is working towards self-reliance in O&G segment and has immense potential to achieve the same, as about 80 per cent of the country's sedimentary area is yet to be explored. Recent large-scale oil and gas discoveries in the Krishna Godavari and Rajasthan basins have further consolidated India's confidence to achieve the targets.

The country's exploration and production sector is majorly dominated by public sector corporations wherein Oil and Natural Gas Corporation (ONGC) accounts for the highest market share.

Key Statistics

  • India stood out as one of the top contributors to growth in the refining sector in 2012, according to the International Energy Agency (IEA). The latest report released by the international entity shows that the country processed 4.5 million barrels per day (mbpd) of crude oil in October 2012, (680, 000 bpd higher than a year earlier)
  • India's refining capacity was enhanced by 400, 000 bpd in 2012. Another 400, 000 bpd of capacity could be added in 2013 if Indian Oil Corporation's 300,000 bpd Paradip and Nagarjuna's 120,000 bpd Cuddalore refineries are completed by the end of this year
  • Furthermore, Indian exports of refined petroleum products marked a record growth in October 2012; wherein they stood at over 1.5 mbpd, according to the Petroleum Planning & Analysis Cell (PPAC). Of this, 39 per cent was diesel, 25 per cent gasoline, 15 per cent naphtha and 8 per cent jet fuel

Diesel & Petrol

  • India's petroleum products' consumption grew by 0.1 per cent year-on-year (y-o-y) in November 2012, according to PPAC. Cumulative growth for the period April - November 2012 stood at 5.5 per cent
  • The petrol consumption recorded highest monthly growth at 13.9 per cent in November 2012 while the high-speed diesel (HSD) recorded a growth of 1.7 per cent
  • PPAC forecasts that India's petroleum production consumption would rise 6.1 per cent to 157.1 million tonne (MT) in FY13

Gas

India's shale gas reserves are at about 290 trillion cubic feet (TCF), of which 63 TCF could be recovered, according to a study by US Energy International Agency. Shale gas is natural gas formed from being trapped within shale formations.

Natural gas sector constitutes about 9.8 per cent of primary energy consumption which is projected to grow up to 20 per cent by 2025 as per Indian Hydrocarbon vision. About 65 per cent of natural gas consumption is accounted by power and fertiliser sectors. Petroleum and Natural Gas Regulatory Board chairman S. Krishnan stresses on the need to evolve a strategy to meet significantly higher share of energy needs from natural gas and take its contribution in the country's energy basket from 9.8 per cent to 25 per cent in the medium term.

  • The demand for natural gas in India has been growing, and is expected to increase by 280 per cent from the current levels to 220 billion cubic meters (BCM) by 2020