The oil and gas sector is among the eight core industries in India and plays a major role in influencing decision making for all the other important sections of the economy.
India’s economic growth is closely related to its energy demand, therefore, the need for oil and gas is projected to grow more, thereby making the sector quite conducive for investment. India retained its spot as the third-largest consumer of oil in the world as of 2021.
According to IEA (India Energy Outlook 2021), primary energy demand is expected to nearly double to 1,123 million tonnes of oil equivalent, as the country's gross domestic product (GDP) is expected to increase to US$ 8.6 trillion by 2040.
Crude oil import rose sharply to US$ 94.3 billion in FY22 (April to January) from US$ 70.72 billion in FY17.
As of September 01, 2021, India’s oil refining capacity stood at 248.9 million metric tonnes per annum (MMTPA), making it the second-largest refiner in Asia. Private companies owned about 35% of the total refining capacity. IOC is the largest domestic refiner, with a capacity of 69.7 MMTPA.
India’s crude oil production in FY22 till January stood at 32.2 MMT.
India’s consumption of oil products stood at 201.26 MMT in 2021, a 3.7% YoY increase.
India’s oil consumption stood at almost 4.9 million barrels per day (BPD) in 2021, up from 4.65 million BPD in 2020.
India’s LNG import stood at 7.9 billion cubic meters (BCM) between October-December 2021. The import for the entire year stood at 24.46 BCM. India is the fourth-largest LNG importer in the world.
Exports of petroleum products from India reached 56.8 MMT worth US$ 21.41 billion in FY21.
As of June 31, 2021, Gas Authority of India Ltd. (GAIL) had the largest share (57.56% or 18,834 kms) of the country’s natural gas pipeline network (32,718 kms).
According to the data released by Department for Promotion of Industry and Internal Trade Policy (DPIIT), FDI inflows in India’s petroleum and natural gas sector stood at US$ 7.98 billion between April 2000-December 2021.
In January 2022, Indian Oil Corp. Ltd. (IOCL) announced plans to expand its city gas distribution (CGD) business, looking to invest Rs. 7,000 crore (US$ 918.6 million).
In January 2022, Adani Total Gas Ltd (ATGL), a joint venture between the Adani Group and TotalEnergies, won licences to expand its City Gas Distribution (CGD) network to 14 new geographical areas with an investment of Rs. 20,000 crore (US$ 2.62 billion).
In November 2021, Oil and Natural Gas Corp. Ltd (ONGC) announced that it invested up to Rs. 6,000 crore (US$ 800 million) in the petrochemicals arm—ONGC Petro Additions Ltd. (OPaL)—to meet its equity requirements.
In September 2021, Bharat Petroleum Corporation Ltd. (BPCL) announced its plan to invest over Rs. 1 lakh crore (US$ 13.66 billion), over a period of five years, to enhance petrochemical capacity and improve refining efficiency, gas proliferation, upstream oil & gas exploration and production and augment the (fuel) marketing infrastructure
In August 2021, Indian Oil Corp (IOC) announced an investment of Rs. 1 lakh crore (US$ 13.12 billion) to raise its refining capacity by almost a third over the next 4-5 years.
In July 2021, Great Eastern Energy Corporation Limited (GEECL) announced plans to invest Rs. 15,000 crore (US$ 1.96 billion) for shale gas core well exploration in West Bengal.
In July 2021, Indian Oil Corporation (IOC) announced to establish India’s first green hydrogen plant at Mathura refinery to introduce green hydrogen activities and projects in the oil and gas sector in the country.
In July 2021, ONGC announced that it will spend Rs. 300 billion (US$ 4.03 billion) in FY22 to boost its oil & gas output.
To expand beyond the natural gas business, in July 2021, GAIL (India) Ltd. announced investment of Rs. 5,000 crore (US$ 670.18 million) to establish a portfolio of renewable energy targeting a capacity of at least 1 gigawatts and build plants for both compressed biogas and ethanol.
In July 2021, Bharat Petroleum Corporation Ltd. (BPCL) announced plan to establish its first-generation ethanol production plant in Telangana at an estimated investment of Rs. 1,000 crore (US$ 134.04 million).
In the Union Budget 2022-23, the customs duty on certain critical chemicals such as methanol, acetic acid and heavy feed stocks for petroleum refining were reduced.
In February 2022, Minister of Petroleum & Natural Gas, Mr. Hardeep Singh Puri, said that India will more than double its exploration area of oil and gas to 0.5 million sq. km. by 2025 and to 1 million sq. km. by 2030 with a view to increase domestic output.
In November 2021, India announced that it will release 5 million barrels of crude oil from its strategic petroleum reserves in a concerted effort to bring down global crude oil prices. This is roughly equivalent to a day’s consumption in the country.
In October 2021, the Union Ministry of Petroleum & Natural Gas approved a revised project cost of Rs. 28,026 crore (US$ 3.8 billion) to increase refining capacity–for the ongoing Numaligarh Refinery Expansion Project–from 3 to 9 MMTPA.
In September 2021, the Indian government approved oil and gas projects worth Rs. 1 lakh crore (US$ 13.46 billion) in Northeast India. These projects are expected to be completed by 2025.
In September 2021, India and the US agreed to expand their energy collaboration by focusing on emerging fuels. This was followed by a ministerial conference of the US-India Strategic Clean Energy Partnership (SCEP).
In July 2021, the Department for Promotion of Industry and Internal Trade (DPIIT) approved an order allowing 100% foreign direct investments (FDIs) under automatic route for oil and gas PSUs.
In June 2021, the government announced that it will auction unmonetised large oil and gas fields of state-owned ONGC and OIL to boost hydrocarbon production.
In February 2021, Prime Minister Mr. Narendra Modi announced that the Government of India plans to invest Rs. 7.5 trillion (US$ 102.49 billion) on oil and gas infrastructure in the next five years.
In February 2021, the government launched key oil and gas projects such as the Ramanathapuram – Thoothukudi natural gas pipeline and Gasoline Desulphurisation Unit at Chennai Petroleum Corporation Limited, Manali.
The Government is planning to set up around 5,000 compressed biogas (CBG) plants by 2023.
India is planning to double its refining capacity to 450-500 million tonnes by 2030.
Crude oil consumption is expected to grow at a CAGR of 4.66% to 500 MMTPA by 2040 from 201.26 million tonnes in 2021.
India’s oil demand is projected to rise at the fastest pace in the world to reach 10 million barrels per day by 2030, from 4.9 million barrels per day in 2021.
Natural Gas consumption is forecast to increase at a CAGR of 12.2% to 550 MCMPD by 2030 from 174 MCMPD in 2021.
India is set to expand India’s natural gas grid to 34,500 kms by adding another 17,000 km gas pipeline. The regasification capacity of the existing 42 MMT per annum will be expanded to 61 MMT per year by the year 2022.
References: Media Reports, Press Releases, Press Information Bureau, Ministry of Petroleum and Natural Gas, Petroleum Planning and Analysis Cell, News Articles, International Energy Agency, BP Statistical Review 2020
