Oil And Gas
India is the second largest oil refiner in Asia as of May 2018.

Oil & Gas Industry in India

Latest update: September, 2018




Growth

Notes: MMTPA - Million Metric Tonnes Per Annum, Mtoe – Million Tonnes of Oil Equivalent; mbpd – Million Barrels Per Day; Figures mentioned in this slide is as per latest data available
Source: US Energy Information Administration (EIA), Ministry of Petroleum and Natural Gas

  • Domestic production accounts for more than three-quarter of the country’s total gas consumption
  • Demand is expected to increase due to higher economic growth, ensure less dependency on imported crude and a desire to use cleaner fuel
  • India’s LNG imports increased at a CAGR of 8.14 per cent during FY08–FY18.
  • Domestic gas production in India stood at around 30.92 billion cubic metres in FY17. Production during April-February 2017-18 reached around 29.11 bcm.
  • In India, auto LPG sector registered sales growth of 4.9 per cent to 346 TMT in 2016-17. Auto LPG consumption grew 10.7 per cent during April-February 2018.
Growth

Notes: bcm – Billion Cubic Metres, TMT – Thousand Metric Tonnes, Estimated Figures, FY181 – Gas production is up to February 2018 , * - gas production is from April 2017 to february 2018
Source: Ministry of Petroleum and Natural Gas, BP Statistical Review 2016, Aranca Research

Last Updated: September, 2018

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.

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.

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.

Gas pipeline infrastructure in the country stood at 16,771 km at the beginning of September 2018.

Investments

According to data released by the Department of Industrial Policy and Promotion (DIPP), the petroleum and natural gas sector attracted FDI worth US$ 7.00 billion between April 2000 and June 2018.

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

  • In September 2018, the Government of Gujarat selected Energy Infrastructure Limited (EIL), a subsidiary of the Netherlands-based Energy Infrastructure Butano (Asia) BV, to set up a Liquefied Petroleum Gas (LPG) terminal at Okha with an investment of Rs 700 crore (US$ 104.42 million).
  • World's largest oil exporter Saudi Aramco is planning to invest in refineries and petrochemicals in India as it looks to enter into a strategic partnership with the country.
  • 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.

Government Initiatives

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

  • 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.

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. Consequently, India’s energy demand as a percentage of global energy demand is expected to rise to 11 per cent in 2040 from 5.58 per cent in 2017.

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.^

Exchange Rate Used: INR 1 = US$ 0.0149 as on Q1 2018-19

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 2018

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

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