Advantage India
Growing
Demand
* Oil demand in India is projected to register a 2x growth to reach 11 million barrels per day by 2045.
* India signed historic deals to import 2.2 million tonnes of LPG from the US in 2026, a strategic step in energy diversification.
* India consumes 25-30 million metric tonnes (MMT) of petrochemicals annually, with demand projected to surge over the coming decades amid rapid urbanisation and increasing incomes.
* Diesel demand in India is expected to double to 163 MT by 2029-30, with diesel and gasoline covering 58% of India’s oil demand by 2045.
* Crude oil imports increased by 3.82% to 243.22 MMT in FY25 compared to rise by 234.26 MMT from previous year.
Rapid
Expansion
* India aims to commercialize 50% of its SPR (strategic petroleum reserves) to raise funds and build additional storage tanks to offset high oil prices.
* Oil Marketing Companies (OMCs) are planning to achieve 900 KTPA of green hydrogen capacity by 2030, with plants already operational at BPCL Bina, HPCL Vizag, and GAIL Vijaipur.
* The industry is expected to attract Rs. 218,475 crore (US$ 25 billion) investment in exploration and production. Refining capacity in the country is expected to increase to 667 MTPA by 2040.
* India plans a capex push of Rs. 3,28,227 crore (US$ 37 billion) to transform itself into a petrochemical's powerhouse by 2030, aiming to supply as much as one-third of global capacity additions.
Supportive FDI
Guidelines
* The Government has allowed 100% Foreign Direct Investment (FDI) in upstream and private sector refining projects.
Policy
Support
* 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.
* Under the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative, as of 1 November 2025, more than 130 compressed biogas (CBG) plants have been commissioned, with several others under construction. Mandatory blending obligations for CBG in the CNG and PNG sectors commenced from FY 2025-26.
Introduction
The oil and gas sector is one of India’s eight core industries and plays a pivotal role in shaping decisions across other major economic sectors. With the country’s economic growth closely linked to energy demand, the need for oil and gas is expected to rise, making the sector highly attractive for investment. As of March 2025, India remained the third-largest consumer of oil globally.
To meet growing demand, the government has implemented supportive policies, including allowing 100% FDI in key segments such as natural gas, petroleum products, and refineries. The FDI limit for public sector refining projects has been increased to 49% without requiring disinvestment or reducing domestic equity in existing PSUs. This policy environment has encouraged both domestic and foreign investment, evidenced by the presence of major companies such as Reliance Industries Ltd and Cairn India. The sector is projected to attract US$ 25 billion in exploration and production investment. India has established itself as a global refining hub with 23 refineries, and further expansion is planned to leverage foreign investment for export-oriented infrastructure, including product pipelines and export terminals.
As of March 2025, the Petroleum and Natural Gas Regulatory Board (PNGRB) authorised the 34,233 km natural gas pipeline network to develop a national gas grid and boost the availability of natural gas in India.
Market Size
In FY26 (April 2025-February 2026) petroleum product export stood at 56.94 MMT, reflecting the country’s strong refining capabilities and its position as a key player in global energy markets. 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, which will convert two large underground caverns into petroleum storage facilities to enhance energy security.
India’s refining capacity has steadily increased over the years, rising from 215.1 million metric tonnes per annum (MMTPA) to 251 MMTPA in FY24, and reaching 258.12 MMTPA as of FY25. Domestic consumption of petroleum products in FY25 stood at 239.2 MMTPA. India produced 2.3 MMT of crude oil in April 2025, with public sector undertakings (PSUs) contributing 78% of production. Crude oil imports increased by 3.82% to 243.22 MMT in FY25 compared to rise by 234.26 MMT from previous year. India imported 32,448 million standard cubic meters (MMSCM) of liquefied natural gas (LNG) during FY26 (April 2025-February 2026), it is reflecting a YoY of 15.4% increase over FY24 at 35,720 MMSCM in FY25.
India is expected to drive global oil demand growth, with consumption projected at 5.74 million barrels per day (bpd) in 2025 and 5.99 million bpd in 2026, according to OPEC estimates. Natural gas consumption is also projected to grow by nearly 60% by 2030, reaching 71,314 million standard cubic metres (MMSCM), up from 67,512 MMSCM in FY24. As of April 2025, India holds 672.07 million tonnes of crude oil and 1,073.01 billion cubic metres (BCM) of natural gas reserves. India’s crude oil production rose in FY26 (April 2025-February 2026) to 25.63 MMT, and natural gas output grew 6.4%, while overall energy demand and fuel consumption continued to rise. Crude oil throughput increased from 255.23 MMT in 2022-23 to 261.55 MMT in 2023-24, at a growth of 2.47%. Crude oil throughput of public sector refineries increased at a CAGR of 2.84%, from 108.03 MMT in FY07 to 178.88 MMT in FY25. At the same time, crude oil throughput of private sector refineries recorded growth at a CAGR of 5.64%, from 33.43 MMT to 89.73 MMT.
To support energy security and sustainability, India plans to expand its natural gas pipeline network by 10,805 km, increase ethanol blending to 20% by 2025, commission 80 Compressed Biogas (CBG) plants, and grow refining capacity to 309.5 MMTPA by 2028. The sector has benefited from substantial investment and exploration success under the New Exploration Licensing Policy (NELP) and Open Acreage Licensing Policy (OALP). Prior to 2014, nine NELP bid rounds attracted over Rs. 3,07,368 crore (US$ 36 billion), yielding 177 oil and gas discoveries.
City gas companies are expanding the gas sector with CBG and LNG, targeting production of four tonnes/day from Narela, establishing 50 new LNG stations, and increasing gas’s share in the energy mix from 6.5% to 15% by 2030. India aims to achieve 126.3 million PNG connections and 18,336 CNG stations by 2034, supported by state-level policies driving a 25% increase in CNG vehicles. In 2024-25, over 2.1 million new PNG connections were added.
The oil and gas market continues to grow rapidly, with ONGC initiating over 45 exploration and development wells in early 2025 and LNG terminal capacities at Dabhol increasing from 5 to 6.3 MMT per annum. Natural gas’s share in the energy mix is targeted to rise from 6% to 15% by 2030, further strengthening India’s energy security and sustainability.
Investments/Recent Developments
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. 43,929.63 crore (US$ 8.22 billion) between April 2000-June 2025.
Following are some of the major investments and developments in the oil and gas sector:
- The government seeks to secure US$ 100 billion in investments for oil and gas exploration by 2030. Four blocks, encompassing a total area of 47,058 square kilometres, have been offered in the Andaman Basin.
- IndianOil is planning to expand the capacity of Ennore LNG Terminal from 5 MMTPA to 10 MMTPA to meet the growing demand for liquefied natural gas (LNG).
- Essar Oil and Gas Exploration & Production Ltd will invest US$ 100 million in a new drilling program at its Raniganj East coal bed methane block in West Bengal.
- India plans a capex push of Rs. 3,28,227 crore (US$ 37 billion) to transform itself into a petrochemicals powerhouse by 2030, aiming to supply as much as one-third of global capacity additions.
- In September 2025, the government approved 2.5 million additional free LPG connections under Pradhan Mantri Ujjwala Yojana (PMUY), raising the total to about 106 million.
- Cairn Oil & Gas plans a Rs. 8,609 crore (US$ 1 billion) Alkaline-Surfactant-Polymer (ASP) injection and Rs. 25,827 to 34,436 crore (US$ 3 to 4 billion) upstream expansion over the next three to four years to double its share in India’s domestic oil and gas output.
- Indian Oil Corporation is expanding its renewable energy footprint with a 650 MW joint venture to power its refineries and aims for net-zero Scope 1 and 2 emissions by 2046 while addressing Scope 3 emissions and human rights disclosures.
- ONGC plans to invest Rs. 2,00,000 crore (US$ 24 billion) in new energy and decarbonisation projects to achieve net-zero Scope 1 and 2 emissions by 2038, focusing on renewable energy, green hydrogen, and carbon capture technologies.
- As of March 31, 2025, Gas Authority of India Ltd. (GAIL) had the largest share (59.25% or 19,674 kms) of the country’s natural gas pipeline network (33,203 kms).
- 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.
- Minister of Petroleum & Natural Gas Mr. Hardeep Singh Puri said the Exploration and Production (E&P) sector offers investment opportunities worth US$ 100 billion by 2030.
- 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).
- The total number of OMC retail outlets increased to 96,726, as of April 1, 2025, from 59,595 in FY17.
- In India, as of FY25, IOCL owned the highest number of retail outlets (40,221), followed by HPCL (23,747), and BPCL (23,642).
- As of June 1, 2025, there were 25,573 LPG distributors in India.
- Production of CBM in June 2025 stood at 67.38 MMSCM.
- India’s oil demand in the year 2024 is expected to see a growth of 220,000 barrels per day to reach 5.57 million barrels per day, up 4.19% from 2023, as per an estimate by OPEC.
- As announced in May 2023, Jio-bp, the retail fuel joint venture of Reliance and bp will sell diesel mixed with detergents and dispersants at Rs. 1 cheaper per litre than gasoil sold by the state-run companies, such as IOCL, BPCL, and HPCL.
- Tata Mining Limited signed an MoU with Gas Authority of India Limited (GAIL), to reduce carbon footprint in its operations, and for the supply of natural gas to its Ferro Alloys Plant at Athgarh in Odisha’s Cuttack district. GAIL will supply the agreed quantity of natural gas through its pipeline from Gujarat to Athgarh.
- 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 (US$ 0.85)/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.
- In February 2023, Oil India Limited commenced the project for India’s first exploratory oil well in Mahanadi Onshore Basin in Odisha under OALP.
Government Initiatives
Some of the major initiatives taken by the Government of India to promote the oil and gas sector are:
- 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.
- Under the Pradhan Mantri Ujjwala Yojana, the number of beneficiaries stood at approximately 10.35 crore as of 1 December 2025. To address pending applications and attain full saturation of LPG coverage, the Government has approved the provision of 25 lakh additional LPG connections in FY 2025-26.
- Phase one of pilot project for Underground Coal Gasification (UCG), initiated on 22 June 2024, entails the preparation of a Technical Feasibility Report via borehole drilling and core testing. Phase two will concentrate on pilot-scale coal gasification.
- Under the FAME-II scheme, 8,932 EV charging stations were installed at retail outlets, with Oil Marketing Companies additionally establishing over 18,500 charging stations using their own resources.
- Public sector oil marketing companies are establishing 4,000 Energy Stations between 2024-25 and 2028-29 along key corridors and other viable locations. As of 1 November 2025, 1,064 Energy Stations have been operationalised nationwide.
- 99% of offshore areas are now open for bidding under the Samudra Manthan initiative, with 114 CBG plants and major-scale green hydrogen and SAF projects currently underway.
- In October 2025, NTPC Ltd and the Government of Gujarat signed a Memorandum of Understanding to explore opportunities in both conventional and non‑conventional energy sectors together.
- The Oilfield (Regulation and Development) Amendment Act, 2025 (ORDA (Amendment) Act, 2025) modernises India’s upstream regulatory framework by streamlining procedures, facilitating integrated energy development, and bolstering investor confidence. These reforms seek to boost domestic oil and gas production, enhance energy security, and foster a stable, transparent policy environment.
- The Government has approved the allocation of 52 lakh metric tonnes (LMT) of surplus rice from the Food Corporation of India (FCI) for ethanol production, 26 LMT each for the Ethanol Supply Year (ESY) 2024-25 (November 1, 2024, to October 31, 2025) and ESY 2025-26 (up to 30th June 2026).
- The Petroleum and Natural Gas Regulatory Board (PNGRB) has approved the Guidelines for the Injection of Compressed Biogas (CBG) into Natural Gas Pipeline (NGPL) and City Gas Distribution (CGD) Networks. These guidelines establish a comprehensive framework to ensure the safe, efficient, and standardised integration of CBG into authorised natural gas infrastructure.
- The Ministry of Petroleum and Natural Gas launched the 10th OALP round in February 2025, offering 25 oil and gas blocks covering 1,91,986 sq. km.
- India is enhancing energy security with upstream reforms, wider crude sourcing, and Rs. 30,00,000-35,00,000 crore (US$ 348-406 billion) planned investments by 2035, Union Minister Mr. Hardeep Singh Puri said at Urja Varta 2025.
- In the budget 2024-25, Rs. 497.25 crore (US$ 59.75 million) allocated to scheme for Development of Pipeline infrastructure for injection of Compressed Biogas (CBG) in City Gas Distribution (CGD) Network.
- In February 2024, Prime Minister, Mr. Narendra Modi unveiled a strategic investment plan of US$ 67 billion for the Indian gas sector over next 5-6 years.
- On May 21, 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.
- In May 2022, the government approved changes in the Biofuel Policy to bring forward the target for 20% ethanol blending with petroleum to 2025-26 from 2030.
Road Ahead
Rapid economic growth in India is driving higher industrial output, which in turn is boosting demand for oil for both production and transportation. Crude oil consumption is projected to grow at a CAGR of 4.59%, reaching 500 million tonnes by FY40 from 223 million tonnes in FY23. In terms of barrels, India’s oil consumption is expected to rise from 4.05 million barrels per day (MBPD) in FY22 to 7.2 MBPD by 2030 and 9.2 MBPD by 2050. Diesel demand is forecast to double to 163 million tonnes by 2029-30, with diesel and petrol together accounting for 58% of India’s total oil demand by 2045. Strong economic growth, rising urbanisation, and increasing industrialisation suggest that demand is unlikely to slow in the foreseeable future.
As of April 2025, India’s total installed refinery capacity stood at 258.12 million metric tonnes (MMT). Indian refiners are expected to add an additional 56 MMT per annum by 2028, further strengthening the country’s refining infrastructure. India is home to the world’s largest refinery, the Jamnagar Refinery in Gujarat, owned by Reliance Industries Limited (RIL), which remains the largest refining complex globally. Plans are underway to nearly double India’s refining capacity to 450-500 MMT by 2030 to meet both domestic consumption and export requirements.
Strategic collaborations are also shaping the sector’s future. Saudi Aramco is in discussions with BPCL and ONGC to establish two 9 MTPA refineries in India, targeting a 26% stake worth approximately Rs. 18,000 crore (US$ 2.09 billion). India’s energy demand is projected to grow faster than that of any other major global economy, supported by continued robust economic expansion, and its share in global primary energy consumption is expected to double by 2035.
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, Union Budget 2024-25, Union Budget 2025-26
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
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