The Indian oil and gas industry is expected to be worth US$ 139,814.7 million by 2015. India’s economic growth is closely connected to energy demand. The need for oil and gas is therefore projected to grow further, providing vast opportunities for investment.
To meet this demand, the Government of India has adopted various policies, such as allowing 100 per cent foreign direct investment (FDI) in many segments of the sector, such as natural gas, petroleum products, pipelines, and refineries. This move along with various others has made the oil and gas sector in India a more viable place to invest. Today, India’s oil and gas sector attracts both domestic and foreign investment, as seen by the presence of Reliance Industries Ltd (RIL) and Cairn India in the country.
During FY 2013–14, the total consumption of petroleum products in India was 158.2 million tonnes (MT). The consumption stood at 14.2 MT in March 2014, according to data released by the Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas.
The share of fuels in the country's exports surged from 5.59 per cent in 2003–04 to 20.05 per cent during 2013–14. Total exports of fuel products stood at US$ 62.69 billion in value terms during FY 2013–14.
The country had total reserves of 1354.76 billion cubic metres (BCM) of natural gas and 758.27 million metric tonnes (MMT) of crude oil at the end of FY 2012–13.
The following are some of the major investments and developments in the oil and gas sector.
Vietnam has offered two exploration blocks to ONGC Videsh (OVL), in addition to the five it has already offered the company. Oil and Natural Gas Corporation (ONGC) has selected one of the five blocks that were proposed in November, 2013 and will evaluate the two new blocks. "We are planning to visit Vietnam soon with our interest in at least one block. Based on the outcome of preliminary examination of data, we may also express interest in the two other blocks recently offered by the country,” said an ONGC official.
Indian Oil Corporation Ltd (IOCL) via its wholly owned affiliate IndOil Montney Ltd, Canada, signed transaction agreements with Progress Energy Canada Ltd and PETRONAS Carigali Canada BV for acquiring a 10 per cent interest in Progress Energy Canada’s LNG-destined natural gas reserves in northeast British Columbia as well as the proposed Pacific NorthWest LNG Ltd (PNW LNG) export facility located on Canada’s West Coast.
Prize Petroleum Company Ltd, a wholly owned subsidiary and upstream arm of Hindustan Petroleum Corporation Ltd (HPCL), has entered into a sale purchase agreement with M/s AWE, Australia to acquire 11.25 per cent interest in T/L1 license and 9.75 per cent interest in T/18P permit for a total consideration of A$ 85 million (US$ 79.66 million).
Reliance Industries Ltd (RIL) has been awarded two offshore blocks, M17 and 18, in Myanmar’s offshore block bidding round of 2013. The blocks in Myanmar’s Moattama basin together encompass 27,600 square kilometres and are at depths of up to 3,000 feet.
GAIL (India) Ltd has entered into an agreement with Japan-based Chubu Electric Power Co to seek collaboration in the area of joint LNG procurement. The two companies will look to work together on shipping optimisation as well.
India and Azerbaijan have proposed to form a joint working group in the field of hydrocarbon. Both countries have agreed to explore opportunities for partnership in renewable energy sector, energy efficiency and several upcoming projects in petro-chemicals, oil and gas, pipelines, etc., in India, Azerbaijan or other third countries in collaboration or joint venture.
Petrotech 2014 was a major success, said Mr M Veerappa Moily, Union Minister for Petroleum and Natural Gas, during the event’s penultimate day. He also announced a major development on the Turkmenistan–Afghanistan–Pakistan–India (TAPI) pipeline project, where the Minister shared that the framework was being readied on a fast-track basis by the four stakeholder nations. The main aim is to bring gas from Turkmenistan to India by 2017.
The expert appraisal committee of Ministry of Environment and Forests, Government of India, has given its approval to IOCL’s Rs 4,320 crore (US$ 718.56 million) liquefied natural gas (LNG) terminal project at Ennore, near Chennai. The proposed facility’s capacity will be five million tonnes per annum (MTPA). The terminal is expandable to 10–15 MTPA. This is part of the corporation’s Rs 56,000 crore (US$ 9.31 billion) investment plan during the 12th Five-Year Plan Period (2012–17).
The Cabinet Committee on Investments (CCI) cleared projects worth Rs 7,947 crore (US$ 1.32 billion) in the sector in December 2013. The projects involve companies such as Chennai Petroleum Corporation Ltd (CPCL), IOCL and HPCL. The Rs 2,379 crore (US$ 395.72 million) Assam renewal project taken up by ONGC has also been cleared. The panel also gave the go-ahead to a Rs 5,200 crore (US$ 864.88 million) worth LNG terminal project of Gujarat State Petroleum Corporation Ltd (GSPC) at Mundra, as per Mr Moily.
The use of shale gas can be the first step in the road to ‘economic freedom’, as per Mr Moily. The minister feels that the country could do something similar to the US, which became a net exporter of energy from a net importer of energy, on the back of shale gas and oil. By 2015–16, India’s demand for gas is expected to touch 124 MTPA, as per projections of India’s Petroleum and Natural Gas Ministry.
Exchange Rate Used: INR 1 = US$ 0.0166 as on June 27, 2014
References: Media Reports, Press Releases, Press Information Bureau, Ministry of Petroleum and Natural Gas