The oil and gas industry has been instrumental in fuelling the rapid growth of the Indian economy. It contributes about 45 per cent of the total energy consumption of the country, which is the fifth largest energy consumer in the world.

Petroleum exports have also emerged as the single largest foreign exchange earner, accounting for 11 per cent and 15 per cent of the total exports in 2005-06 and 2006-07, and growing at the rate of 67 per cent and 58 per cent, respectively. The growth continues in the new fiscal with the export of petroleum products touching US$ 19.7 billion during April-December 2007.

Simultaneously, domestic production of crude oil has been increasing steadily. While production grew by 5.6 per cent in 2006-07 to 33.98 million tonne (mt) from 32.19 mt in 2005-06, it has increased to 34.11 mt during 2007-08.

Global Refining Hub

Strategically located en route of Middle East crude for East Asian and Pacific-rim markets, India is emerging as the global hub for oil refining. It also enjoys competitive cost advantage, with capital costs lower by as much as 25 to 50 per cent over other Asian countries.

Already, the fifth largest country in the world, in terms of refining capacity, India is well placed to take advantage of the expected global refining capacity deficit of around 112 mtpa by 2010 with its planned expansion plans.

Indian companies plan to increase their refining capacity to 242 mtpa by 2011-12 from about 149 mtpa in 2007. This is well above the projected domestic demand of 196 million tones, leaving the rest to be exported.

• Indian Oil Corp (IOC) plans to increase its refining capacity from 60.2 mtpa to 76.7 mtpa.
• ONGC plans to scale up its refining capacity up to 45.5 million tonnes by 2009-10 from about 12 mtpa.
• Bharat Petroleum Corporation is setting up a 6 mtpa at Bina in Madhya Pradesh.
• Reliance Industries Ltd is constructing a new refinery in the Jamnagar SEZ with a capacity of 29 mtpa.
• Nagarjuna Oil Corp is planning a new refinery at Cuddalore with a capacity of 6 mtpa.
• Hindustan Petroleum is setting up a 9 mtpa refinery along with the LN Mittal group at Bhatinda in Punjab.
• Essar plans to more than triple capacity at its refinery to 34 mtpa from the current 10.5 mtpa.
• Hindustan Petroleum Corporation plans to invest US$ 2.5 billion in expanding its Visakhapatnam refinery capacity to 16 million tones.

In fact, Reliance's new refinery (which will be the world's only full-export-oriented refinery) will be the world's sixth-largest. And with the existing refinery of RIL, the combined capacity (RPL along with RIL) will turn the Jamnagar complex into the world's largest single-location refinery.