Commerce Dashboard
Oil And Gas
As of March 1, 2020, the oil refining capacity of India stood at 249.4 million tonnes, making it the second largest refiner in Asia.

Oil & Gas Industry in India

Latest update: March, 2020

Growth

 

Last Updated: March, 2020

Indian Oil And Gas Industry Report  (Size: 697.16 KB ) (May, 2020)

Introduction

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 energy demand; therefore, the need for oil and gas is projected to grow more, thereby making the sector quite conducive for investment.

The Government of India has adopted several policies to fulfil the increasing demand. The government has allowed 100 per cent Foreign Direct Investment (FDI) in many segments of the sector, including natural gas, petroleum products, and refineries, among others. Today, it attracts both domestic and foreign investment, as attested by the presence of Reliance Industries Ltd (RIL) and Cairn India.

India had 4.5 thousand million barrels of proven oil reserves at the end of 2018 and produced 39.5 million tonnes in 2018. As of Apr 01, 2019, India had a network of 10,419 km of crude pipeline having a capacity of 145.6 mmtpa.

Market Size

India is expected to be one of the largest contributors to non-OECD petroleum consumption growth globally. Oil imports rose sharply to US$ 87.37 billion in 2017-18 from US$ 70.72 billion in 2016-17. India retained its spot as the third largest consumer of oil in the world in 2017 with consumption of 4.69 mbpd of oil in 2017, compared to 4.56 mbpd in 2016.

As of December 1, 2019, the oil refining capacity of India stood at 238.60 million tonnes, making it the second largest refiner in Asia. Private companies own about 35.36 per cent of the total refining capacity.

India was the fourth-largest Liquefied Natural Gas (LNG) importer in 2017 after Japan, South Korea and China. LNG imports increased to 26.11 bcm in 2017-18 from 24.48 bcm in 2016-17. India’s LNG imports stood at 27.43 billion cubic meters (bcm) during April 2019-January 2020.

Gas pipeline infrastructure in the country stood at 16,226 km at the beginning of February 2019.

India’s domestic crude oil production in July 2019 is 2,769 thousand tonne (TMT). As of 2017, the country had 600 million metric tonnes (MMT) of proven oil reserves.

In FY19, total crude oil imports were valued at US$ 111.96 billion as compared to US$ 87.70 billion in FY18. In FY19, crude oil imports increased to 4.53 mbpd from 4.41 mbpd in FY18.

Production of petroleum products by fractionators grew to 4,931.22 tmt in FY19 from 4,808.00 tmt in FY18 and reached 3,179 TMT in FY20 (till November 2019).

 Investments

According to data released by the Department for Promotion of Industry and Internal Trade Policy (DPIIT), the petroleum and natural gas sector attracted FDI worth US$ 7.07 billion between April 2000 and December 2019.

Following are some of the major investments and developments in the oil and gas sector:

  • In March 2020, Indian Oil Corp (IOC) has begun the supply of the world's cleanest petrol and diesel across the country with all its 28,000 petrol pumps dispensing ultra-low sulphur fuel a good two weeks before the April 1 deadline.
  • Indian Oil Corporation (IOC), plans to invest Rs 500 crore (US$ 71.54 million) at Chitradurga in Karnataka.
  • ExxonMobil and ONGC signed a Memorandum of Understanding (MoU) for offshore blocks.
  • Oil and Natural Gas Corporation (ONGC) has raised US$ 300 million under the External Commercial Borrowing route.
  • In December 2019, INDMAX refining technology owned by Indian Oil Corporation Limited's (IOCL's) has been licensed to Naftna Industrija Srbije (NIS) of Serbia.
  • In November 2019, winter-grade diesel suitable for extreme winters launched.
  • MOU signed between NSIC & ARAMCO Asia for development in Oil & Gas Sectors.
  • Foreign investors will have opportunities to invest in projects worth US$ 300 billion in India, as the country looks to cut reliance on oil imports by 10 per cent by 2022, according to Mr Dharmendra Pradhan, Minister of Petroleum and Natural Gas, Government of India.
  • Oil and Natural Gas Corporation (ONGC) is going to invest Rs 17,615 crore (US$ 2.73 billion) on drilling oil and gas wells in 2018-19.
  • As of March 2019, Brookfield is going to acquire Reliance Gas Transportation Infrastructure, now known as East West Pipeline (EWPL) for Rs 13,000 crore (US$ 1.80 billion).

 

Government Initiatives

Some of the major initiatives taken by the Government of India to promote oil and gas sector are:

  • As per Union Budget 2019-20, Indian Scheme ‘Kayakave Kailasa’, the Ministry of Petroleum & Natural Gas has enabled SC/ST entrepreneurs in providing Bulk LPG Transportation. State run energy firms Bharat Petroleum, Hindustan Petroleum and Indian Oil Corp plan to spend US$ 20 billion on refinery expansions to add units, by 2022.
  • The Government of India is planning to set up around 5,000 compressed biogas (CBG) plants by 2023.
  • The government is planning to invest US$ 2.86 billion in the upstream oil and gas production to double the natural gas production to 60 bcm and drill more than 120 exploration wells by 2022.
  • Government of India is planning to invest Rs 70,000 crore (US$ 9.97 billion) to expand the gas pipeline network across the country.
  • In September 2018, Government of India approved fiscal incentives to attract investments and technology to improve recovery from oil fields which is expected to lead to hydrocarbon production worth Rs 50 lakh crore (US$ 745.82 billion) in the next twenty years.
  • State-run oil firms are planning investments worth Rs 723 crore (US$ 111.30 million) in Uttar Pradesh to improve the liquefied petroleum gas (LPG) infrastructure in a bid to promote clean energy and generate employment, according to Mr Dharmendra Pradhan, Minister of Petroleum and Natural Gas, Government of India.
  • A gas exchange is planned in order to bring market-driven pricing in the energy market of India and the proposal for the same is ready to be taken to the Union Cabinet, according to Mr Dharmendra Pradhan, Minister of Petroleum and Natural Gas, Government of India.
  • The Oil Ministry plans to set up bio-CNG (compressed natural gas) plants and allied infrastructure at a cost of Rs 7,000 crore (US$ 1.10 billion) to promote the use of clean fuel.

 

Achievements

Following are the achievements of the government during 2018:

  • The energy trade between India and US is likely to touch US$ 10 billion in the financial year 2019-20.
  • As on September 01, 2019, Gas Authority of India Ltd. (GAIL) has largest share (69.90 per cent or 11,411 km) of the country’s natural gas pipeline network (16,324 km)
  • As of Oct 1, 2019 (P), there were 24,127 LPG distributors (of PSUs) in India.
  • The total number of OMC retail outlets increased to 65,973 at the start of October 2019 (P) from 59,595 at the end of FY17.
  • Under City Gas Distribution (CGD) network, 86 Geographical Areas constituting 174 districts in 22 States/ Union Territories are covered
  • As of June 2019, more than 7.23 crore connections have been released under Pradhan Mantri Ujjwala Yojana (PMUY).

 

Road Ahead

Energy demand of India is anticipated to grow faster than energy demand of all major economies, on the back of continuous robust economic growth. India’s energy demand is expected to double to 1,516 Mtoe by 2035 from 753.7 Mtoe in 2017. Moreover, the country’s share in global primary energy consumption is projected to increase by 2-folds by 2035.

Crude oil consumption is expected to grow at a CAGR of 3.60 per cent to 500 million tonnes by 2040 from 221.76 million tonnes in 2017.^

Natural Gas consumption is forecasted to increase at a CAGR of 4.31 per cent to 143.08 million tonnes by 2040 from 54.20 million tonnes in 2017.^

Diesel demand in India is expected to double to 163 million tonnes (MT) by 2029-30.

Note: Conversion rate used as on January 2020, Re 1 = US$ 0.01402

References: Media Reports, Press Releases, Press Information Bureau, Ministry of Petroleum and Natural Gas, Petroleum Planning and Analysis Cell, News Articles, International Energy Agency

Note: ^As per BP Energy Outlook 2019

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

Posters

Brand India Pharma

CLEAN AFFORDABLE ENERGY FOR RURAL HOUSEHOLDS

Husk Power System uses novel biomass gratification technology to convert abundant rice husk into combustible gases.

+ More >

Brand India Pharma

IBEF Publications

IBEF Publication

Agri Export Policy - Towards smoother trade, wider global presence

English

+ More Publications >

IBEF Publication

IBEF Blog - INDIA ADDA – PERSPECTIVES ON INDIA More

author_logo-ibef1.jpg India’s journey from manufacturing zero PPE kits to two lakh PPE kits per day
IBEF, Knowledge Centre

India was manufacturing nearly zero PPE kits until January 2020. It was manufacturing only medical gowns, which was just one of the components of the kit, whereas, no PPE...

author_logo-ibef1.jpg Self-Reliant India Movement: An opportunity
IBEF, Knowledge Centre

At a time when the world is suffering from a deadly pandemic, India plans to convert this crisis into an opportunity and strengthen its fight by becoming Aatmanirbhar or ...

author_logo-ibef1.jpg EXPORT OF MOBILE PHONES FROM INDIA: OVER 100% GROWTH IN FY20
IBEF, Knowledge Centre

Smartphones market in India have witnessed a phenomenal growth in the past few years. India overtook the United States (US) to become the second-largest smartphone market...

author_logo-ibef1.jpg India's largest tech FDI: Decoding the Facebook-Reliance Jio deal
IBEF, Knowledge Centre

The technology sector in India has witnessed its largest foreign direct investment (FDI) as Facebook announced its investment in Jio Platforms, a unit of Reliance Industr...

author_logo-ibef1.jpg SUSTAINABLE AGRICULTURE - TURNING TO ORGANIC AND NATURAL FARMING
IBEF, Knowledge Centre

Agriculture and its allied sector are crucial for the development of a country, especially for India where it is the largest source of livelihood. The sector plays a majo...

author_logo-ibef1.jpg Digital India: Power To Empower
IBEF, Knowledge Centre

The global economy is presently going through the fourth Industrial Revolution, also known as the Digital Revolution. This revolution is changing not only the way we inte...

ideas More

Ideas

Zomato: Top Of The Food Chain
Zomato, an Indian start-up is in the business of online food ordering. It initially launched Foodiebay.com in Gurugram in 2008, a website that scanned menus and provided ratings and recommendations on....

JOIN IBEF.org

Join IBEF.org now. Enjoy FREE subscriptions downloads, updates and more.

Error

Already a member?
Login / Retrieve Password