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Oil and Gas

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Oil and Gas Industry in India

June, 2013

Introduction

The Indian Oil and Gas (O&G) sector is one of the six core industries of India and contributes over 15 per cent to the Gross Domestic Product (GDP). The country is the sixth largest consumer of oil in the world and the ninth largest crude oil importer.

The sector is of immense importance to the economy owing to its significant forward integration with many other sectors. India is committed to boosting its growth in the years to come and this progress would translate into the country’s energy needs growing many times. The need of the hour, therefore, is to channelise all efforts on exploration of new blocks effectively as well as efficiently.

The growing demand for crude oil and gas in the country coupled with policy initiatives of the Government of India towards increased E&P activity has given a great impetus to the growth of this sector.

Key Statistics

  • Oil continued to remain the top item in India's export basket during 2012-13. Crude oil as well as other petroleum products accounted for about one-fifth of India's outbound shipments, giving the much-needed boost to the country’s exports. Petroleum product exports rose 7.7 per cent at US$ 60.3 billion in 2012-13 from US$ 56.04 billion in 2011-12.
  • Indian refiners processed 6.8 per cent more oil in April 2013 than a year earlier at 3.62 million barrels per day (mbpd), according to recent Government data, reflecting expanded capacity.
  • Natural gas output stood at 3 billion cubic metres (BCM) in April 2013.
  • 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.

Diesel & Petrol

Crude oil production, as indicated by the core sector index, accounts for over 5 per cent of India's index of industrial production (IIP).

Diesel consumption increased by 4.2 per cent year-on-year (y-o-y) in April 2013 to 6.2 million tonnes (MT), according to data compiled by the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum and Natural Gas. The growth in diesel consumption was faster than other petroleum products.

The overall consumption of petroleum products increased 3.1 per cent y-o-y in April 2013, PPAC data indicated.

Gas

Natural Gas has emerged as one of the most preferred fuel owing to its environment-friendly properties, greater efficiency and cost effectiveness.

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 emphasises on the need to develop a strategy to meet substantial 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 BCM by 2020.