Indian Oil and Gas Industry Analysis

As of December 01, 2020, India’s oil refining capacity stood at 259.3 million metric tonnes (MMT), making it the second-largest refiner in Asia. Private companies own about 35.29% of the total refining capacity in FY20.

Assam, Gujarat and Rajasthan account for more than 96% of oil production in India

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 USD 8.6 trillion by 2040.

In FY20, crude oil production in India stood at 30.5 MMT. In FY20, crude oil import increased to 4.54 mbpd from 4.53 mbpd in FY19. Natural Gas consumption is forecast to reach 143.08 million tonnes (MT) by 2040. India’s LNG import stood at 33.68 bcm during FY20. LPG penetration rate of households reached ~97% in early 2020 compared with 56% in 2016. 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 5.05 million barrel per day in 2020.

India’s consumption of petroleum products grew 4.5% to 213.69 MMT during FY20 from 213.22 MMT in FY19. Export of petroleum products from India increased from 60.54 MMT in FY16 to 65.7 MMT in FY20. Diesel was the most-consumed oil product in India, accounted for 39% of petroleum product consumption in 2019. It is used primarily for commercial transportation and further, in the industrial and agricultural sectors.

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.

Several initiatives have been taken by the Government of India, including the launch of Open Acreage Licensing Policy (OALP) and Coal Bed Methane (CBM) policy. It has allowed 100% Foreign Direct Investment (FDI) in companies and 49% in refining under the automatic route.

FDI inflow in India’s petroleum and natural gas sector stood at US$ 7.91 billion during April 2000-December 2020. The Government is planning to invest US$ 2.86 billion in upstream oil and gas production to double the natural gas production to 60 bcm and drill more than 120 exploration wells by 2022. Further, rising demand for oil in India is expected to drive investment in refining capacity expansions and upstream production*. The Indian oil and natural gas sector is likely to witness an investment of US$ 206 billion in the next eight to ten years.

As of December 31, 2020, Gas Authority of India Ltd. (GAIL) had the largest share (69.39% or 11,884 kms) of the country’s natural gas pipeline network (17,126 kms).

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 Union Budget 2021, the government allocated funds worth Rs. 12,480 crore (US$ 1.71 billion) for direct benefit transfer of LPG (liquefied petroleum gas) and Rs. 1,078 crore (US$ 147.31 million) to feedstock subsidy to BCPL/Assam Gas Cracker Complex.

In Union Budget 2021, the Finance Minister announced to provide 1 crore more LPG connections under Pradhan Mantri Ujjwala Yojana (PMUY) scheme.

Oil Marketing Companies (OMCs) delivered 6.8 crore LPG cylinders to Pradhan Mantri Garib Kalyan Package (PMGKP) beneficiaries by May 20, 2020.

The total number of OMC retail outlets increased to 75,696 as of March 1, 2021 (P), from 59,595 in FY17.

IOCL, as of March 01, 2020 (P), owned the highest number of retail outlets in the country (31,559), followed by HPCL (18,265) and BPCL (18,171).

As of March 01, 2021 (P), there were 23,993 LPG distributors (under PSUs) in India.

*As per Moody’s Investor Service