One of India's eight core businesses is the oil and gas industry, which has a significant impact on all other major economic sectors. Rapid economic growth is leading to greater outputs, which in turn is increasing the demand of oil for production and transportation. According to the 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.
Indian refining capacity has increased from 215.1 million metric tonne per annum (MMTPA) to 256.8 MMTPA as of FY24.
Domestic consumption of the petroleum products in FY25 was 239.2 MMTPA.
India imported 36,699 million standard cubic meters (mmscm) of liquefied natural gas (LNG) during FY25, reflecting a 15.4% increase over FY24.
Crude oil imports increased by 4.2% to 242.4 MT in FY25 compared to rise by 9.7 MT from previous year.
India’s natural gas consumption is projected to grow by nearly 60% by 2030, reaching 297 million standard cubic metres per day (mmscmd), up from 188 mmscmd in FY24.
India's oil and gas sector has seen substantial investment and exploration success under the New Exploration Licensing Policy (NELP) and Open Acreage Licensing Policy (OALP). Before 2014, nine NELP bid rounds attracted over Rs. 3,07,368 crore (US$ 36 billion) in investment, yielding 177 oil and gas discoveries.
Indian refining capacity has increased from 215.1 million metric tonne per annum (MMTPA) to 256.8 MMTPA as of FY24.
The Union Budget FY26 has allocated Rs. 5,597 crore (US$ 640.46 million) to the petroleum and natural gas (PNG) ministry for phase II of the Indian Strategic Petroleum Reserves Ltd (ISPRL) project, aimed at turning two vast underground caverns into petroleum storage facilities.
In FY25 petroleum product export stood at 64.7 MMT.
India retained its spot as the third-largest consumer of oil in the world, as of 2023.
India has 23 refineries - 18 are in the public sector, two in the joint sector and three in the private sector. India’s state refineries have upgraded their facilities to comply with a new government requirement to produce oil products with the equivalent of Euro VI emission standards. In FY24, the oil sector’s total installed refinery capacity stood at 253.9 MMT up to March 2024, and IOCL emerged as the largest domestic refiner with a capacity of 70.1 MMT, making it the second-largest refiner in Asia. Private companies own about 35% of the total refining capacity.
India, the world’s fourth largest crude oil refiner, is expected to add one million barrels per day (mb/d) of refining capacity by 2028.
According to the International Energy Agency (IEA), India’s medium-term outlook for natural gas consumption remains solid due to rising infrastructure and supportive environment policies. Industrial consumers are expected to account for 40% of India’s net demand growth. The demand is also expected to be driven by sectors such as residential, transport and energy.
As per data released by Department for Promotion of Industry and Internal Trade (DPIIT), FDI inflows in India’s petroleum and natural gas sector stood at Rs. 43,760.75 (US$ 8.19 billion) between April 2000- December 2024.
India's Oil and Natural Gas Corp is seeking joint venture partners to build very large ethane carriers (VLECs) to ship feedstock for its petrochemical plant in western India.
Brazilian oil major PetrAleo Brasileiro S.A. (Petrobras) signed an agreement to sell crude oil to Bharat Petroleum Corporation Ltd (BPCL) and pacts to cooperate in exploring oil and gas with ONGC Videsh Ltd and Oil India Ltd.
AM Green has inked a Memorandum of Understanding (MoU) with the Government of Uttar Pradesh to establish a Sustainable Aviation Fuel (SAF) project in the state.
Green hydrogen and ammonia producer AM Green of the Greenko Group, and global logistics major DP World have entered into a pact to develop storage and logistics facilities for 2 million tonnes of green fuel per annum.
The Union Budget 2025-26 has allocated Rs. 5,597 crore (US$ 640.46 million) to the petroleum and natural gas (PNG) ministry for phase II of the Indian Strategic Petroleum Reserves Ltd (ISPRL) project, aimed at turning two vast underground caverns into petroleum storage facilities.
There have been multiple partnerships in the sector. Bharat Petroleum Corporation Ltd. (BPCL) and Microsoft have established a strategic cloud partnership targeted at speeding up the company's digital transformation and influencing the oil and gas industry's future innovation. India and the US have also agreed to expand their energy collaboration by focusing on emerging fuels, which was followed by a ministerial conference of the US-India Strategic Clean Energy Partnership (SCEP).
India aims to commercialise 50% of its SPR (strategic petroleum reserves) to raise funds and build additional storage tanks to offset high oil prices. Prime Minister Mr. Narendra Modi has announced that the Government of India plans to invest Rs. 7.5 lakh crore (US$ 102.49 billion) on oil and gas infrastructure in the next five years. There were 89,396 OMC retail outlets in India, as of March 1, 2024.
The Petroleum and Natural Gas Regulatory Board (PNGRB), the downstream regulator, in March 2023, announced that it has amended the PNGRB Determination of Natural Gas Pipeline Tariff regulations to incorporate provisions for Unified Tariff for natural gas pipelines with a mission of “One Nation, One Grid, and One Tariff.” Based on the regulations, PNGRB has notified a levelized Unified Tariff of Rs. 73.93/MMBTU and created three tariff zones for Unified Tariff, where the first zone is up to a distance of 300 kms from the gas source, the second zone is 300-1.200 kms, and the third zone is beyond 1,200 kms.
India’s oil and gas production is expected to achieve a mid-decade peak between 2023-2032, around 2027, driven by the KG-Basin projects operated by Reliance Industries Limited and Oil and Natural Gas Corporation (ONGC).
In May 2022, the Government announced a reduction in excise duty of Rs. 8 (US$ 0.10) per litre on petrol and Rs. 6 (US$ 0.077) per litre on diesel, to combat the high fuel prices. In the same month, the government approved changes in the Biofuel Policy to bring forward the target for 20% ethanol blending with petroleum to 2025-26 from 2030.
By 2030, India wants to increase its refining capacity by double, to 450–500 million tonnes. On the back of ongoing strong economic expansion, it is predicted that India's energy demand will increase more quickly than that of any other major global economy. Consequently, India’s energy demand as a percentage of global energy demand is expected to rise to 11% in 2040 from 6% in 2017.
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
Notes: MMTPA - Million Metric Tonnes Per Annum, LNG - Liquefied Natural Gas, MMSCM - Million Metric Standard Cubic Meters, BCM – Billion Cubic Meters, MCMPD - Million Cubic Metres Per Day
