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Oil and Gas

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Oil and Gas

June, 2011

A significant catalyst in fuelling the growth of the Indian economy, the oil and gas sector presents a powerful scope for investors in the years to come. Of late, the government has followed deregulation path to attract foreign participants. The New Exploration Licensing Policy (NELP), conceived to address the increasing demand supply gap of energy in India, has proved to be successful in attracting the interest of both domestic private sector players and some foreign players with eight rounds of bidding, with Reliance Industries and Cairn being particularly active in this arena.

India is ranked second, behind Australia, in BMI’s composite Business Environment (BE) league table, leading China and Vietnam as a result of a good performance in both the upstream and downstream segments. India ranks second, ahead of Vietnam, in BMI’s upstream BE ratings, with a strong resource position being offset somewhat by extensive state involvement, a limited competitive landscape and only a moderate risk environment.

The country shares first place with China in BMI’s downstream Business Environment ratings, reflecting its status as a high-growth energy market with strongly positive population and demand trends, plus a low level of retail site intensity. It is seven points ahead of Japan, with no threat from the more mature Asian energy economy.

Oil & Gas – Market Size

Production and Consumption

According to the provisional production data released by the Ministry of Petroleum and Natural Gas, dated June 2011,

  • Crude Oil production for April 2011 was 3.186 million metric tonne (MMT), as compared to the 2.871 MMT in April 2010.
  • Natural Gas production during April-January 201 1 was 4096.3 million cubic metres (MCM)
  • During April 2011, 14.006 MMT of crude oil was refined, compared to 13.136 MMT refined in April 2010.

ONGC Videsh Limited (OVL), the wholly-owned subsidiary of Oil and Natural Gas Corporation Ltd. (ONGC), has registered a production of 9.433 million tonnes of oil equivalents (MMTOE) in 2010-11, surpassing the earlier peak production of 8.870 MMTOE of oil and oil equivalent gas in 2009-10.

India will account for 12.4 per cent of Asia Pacific regional oil demand by 2015, while providing 11.2 per cent of supply, according to the BMI India Oil & Gas Report for third-quarter 2011. Regional oil production was around 7.6mn barrels per day (b/d) in 2001 and averaged an estimated 8.0mn b/d in 2010. It is set to increase to 8.2mn b/d by 2015.

Similarly, Regional oil use of 20.6mn b/d in 2001 reached an estimated 26.4mn b/d in 2010 and is forecast to rise to around 29.6mn b/d by 2015.India is the world’s fifth biggest energy consumer and the need is continuously growing, according to KPMG’s ‘Oil and Natural Gas Overview 2010’.


Demand for petroleum products rose by 4.4 per cent (year-on-year) to 144.35 million tonnes (MT) during the financial year 2010-11, according to the latest figures released by the Petroleum Planning and Analysis Cell (PPAC).

Currently, India's total demand for the petroleum products is estimated at around 140 million tonnes per annum (MTPA). This creates a spare capacity of 48 MTPA at the refineries. The spare capacity will increase to around 90 MTPA. The domestic demand is expected to be around 142- 143 million tonnes per annum.


The proportion of natural gas in the total energy mix has increased to 10 per cent in 2009 from 4 per cent in 1999. The same is expected to increase to 20 per cent in 2025, playing a vital role in the country’s total energy-mix

It is expected that gas production would rise from an estimated 45billion cubic meters (BCM) in 2010 to a possible 95 BCM by 2019.

In a bid to develop its gas field in the KG Basin and produce up to 30 MCM a day in five years, ONGC has earmarked US$ 7.7 billion for investment. The company plans to drill eight additional wells in the block to maximize output from the deep-sea field in the Bay of Bengal and has sought approval for the plan from the directorate general of hydrocarbons and the petroleum ministry.