India is the fifth largest consumer of energy in the world, and is likely to surpass Japan and Russia to become the world's third biggest energy consumer by 2030. According to the International Energy Agency (IEA), hydrocarbons satisfy major energy demand in India wherein coal and oil, together, represent about two-thirds of total energy use. Natural gas accounts for about 7 per cent share. According to Oil & Gas Journal (OGJ), India has about 5.7 billion barrels of proven oil reserves.
India's oil and gas sector has attracted investors round the globe as the country enjoys rich reserves of resources.
The petroleum and natural gas industry in India has attracted foreign direct investment (FDI) worth US$ 3, 332.78 million during April 2000 to December 2011, according to the data provided by Department of Industrial Policy and Promotion (DIPP). The Department further recorded US$ 196 million during April– December 2011-12, in the industry.
According to the provisional production data released by the Ministry of Petroleum and Natural Gas in a press release:
According to Business Monitor International (BMI)'s India Oil and Gas Report for first quarter of 2012, India's average oil and liquids production for 2011 is estimated at 1.04 million barrels per day (B/D) which will touch the peak production at 1.06 million B/D in 2012. Further, giving its demand outlook, BMI projects consumption to rise sharply to 4.29 million B/D by 2016 from 3.44 million B/D in 2011. Total gas consumption is estimated by BMI at around 81 billion cubic meters (BCM) in 2016 from around 58 BCM in 2011.
Around 40 per cent of fuel consumption in India is satisfied by diesel. According to IEA, there would be an increase in India's fuel demand by 3.8 per cent which would be majorly accounted by diesel and petrol (gasoline). IEA expects diesel's demand to have increased to 1.37 million b/d in 2011 (rising by 5.8 per cent) and further it projects an increment of 5.5 per cent in 2012 at around 1.44 million b/d.
Demand for petrol is expected to have expanded by 7.6 per cent (363,000 B/D) in 2011 and is projected to increase by another 6.7 per cent (388,000 B/D) in 2012. The Ministry of Petroleum anticipates a growth of 4.6 per cent in the sale of oil products in the FY12.
Development of gas-fuelled power stations in India is boosting the demand for gas in the country. BMI states that gas consumption in India has increased by more than 160 per cent since 1995 while average annual demand would grow by 6 per cent over next few years. Gas production is estimated at 50 BCM in 2011 while total gas consumption is predicted at 81 BCM in 2016 from an estimated 58 BCM in 2011 by BMI.