Oil and

Natural
Gas
Vikas Pannu
(26148)
 Introduction
 The oil and gas sector is among the eight core industries in India
and plays a major role in influencing the decision-making for all
the other important sections of the economy.
 India’s economic growth is closely related to its energy demand,
therefore, the need for oil and gas is projected to increase,
thereby making the sector quite conducive for investment. India
retained its spot as the third-largest consumer of oil in the world
as of 2022.
 Continued…..
 The Government has adopted several policies to fulfil
the increasing demand. It has allowed 100% foreign
direct investment (FDI) in many segments of the
sector, including natural gas, petroleum products and
refineries, among others.
 The FDI limit for public sector refining projects has
been raised to 49% without any disinvestment or
dilution of domestic equity in existing PSUs.
 Market Size
 According to the IEA (India Energy Outlook 2021), primary energy demand is
expected to nearly double to 1,123 million tones of oil equivalent, as India's gross
domestic product (GDP) is expected to increase to US$ 8.6 trillion by 2040.
 As of April 2023, India’s oil refining capacity stood at 253.91 MMT, making it
the second-largest refiner in Asia. Private companies owned about 35% of the
total refining capacity.
 India is expected to be one of the largest contributors to non-OECD petroleum
consumption growth globally. India’s consumption of petrol products stood at
222.3 MMT in FY23. High-Speed Diesel was the most consumed oil product in
India and accounted for 38.6% of petroleum product consumption in FY23.
 Continued …..
 India’s consumption of petroleum products stood at almost
4.44 million barrels per day (BPD) in FY23, up from 4.05
million BPD in FY22. India’s crude oil production stood at
2.69 MBPD during April-October 2023.
 India’s LNG import stood at 20.1 million metric tones
(MMT) in FY23. Gross production of LNG was 2,883
MMSCM in January, 2023. According to the International
Energy Agency (IEA), consumption of natural gas in India is
expected to grow by 25 BCM, registering an average annual
growth of 9% until 2024.
 Investments / Recent Developments
• As of November 1, 2023, India had 10,938 kms of crude pipeline network,
with a capacity of 153.1 MMTPA.
• In FY24 (until October 2023), the crude oil production in India stood at
17.17 MMT.
• 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).
• With 12,235 kms of refined products pipeline in India, the Indian Oil
Corporation Limited (IOCL) leads the segment with 53.17%, as of
November 1, 2023.
• The total number of OMC retail outlets increased to 88,248, as of
November 1, 2023, from 59,595 in FY17.
 Continued…
• In February 2023, Oil India Limited commenced the project for
India’s first exploratory oil well in Mahanadi Onshore Basin in
Odisha under OALP.
• In May 2022, ONGC announced plans to invest US$ 4 billion from
FY22-25 to increase its exploration efforts in India.
• In April 2022, Indian Oil Corporation Limited, Larsen & Toubro and
Goldman Sachs-backed renewable energy producer ReNew Power
formed a joint venture by signing a term sheet. This JV will develop
green hydrogen projects, helping India cut down its carbon emissions.
• Exports of petroleum products from India reached 61 MMT in FY23.
 Government Initiatives
• On May 21, 2022, the Government announced a reduction in excise duty of Rs. 8 (US$
0.10) per liter on petrol and Rs. 6 (US$ 0.077) per liter 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.
• In the Union Budget 2022-23, the customs duty on certain critical chemicals such as
methanol, acetic acid and heavy feed stocks for petroleum refining were reduced.
• In February 2022, Minister of Petroleum & Natural Gas, and Housing & Urban Affairs,
Mr. Hardeep Singh Puri, said that India will more than double its exploration area of oil
and gas to 0.5 million sq. km. by 2025 and to 1 million sq. km. by 2030 with a view to
increase domestic output.
• In 2022, the Ministry of Petroleum and Natural Gas launched the ninth bid round under
the OALP. Under this round, investors have been offered around 223,031.4 square
kilometer.
 Continued….
• In November 2021, India announced that it will release 5 million barrels of crude oil from its
strategic petroleum reserves in a concerted effort to bring down global crude oil prices. This is
roughly equivalent to a day’s consumption in the country.
• In November 2021, the government set up a committee to work out measures needed to make
natural gas available to power plants at reasonably stable prices.
• In October 2021, the Union Ministry of Petroleum & Natural Gas approved a revised project cost
of US$ 3.8 billion (Rs. 28,026 crore) to increase refining capacity for the ongoing Num Aligarh
Refinery Expansion Project from 3 to 9 MMTPA.
• In September 2021, the Indian government approved oil and gas projects worth Rs. 1 lakh crore
(US$ 13.46 billion) in Northeast India. These projects are expected to be completed by 2025.
• In September 2021, India and the US agreed to expand their energy collaboration by focusing on
emerging fuels. This was followed by a ministerial conference of the US-India Strategic Clean
Energy Partnership (SCEP).
Road
Ahead
 Road Ahead
 Crude oil consumption is expected to grow at a CAGR of 5.14% to
500 million tones by FY40 from 202.7 million tones in FY22. In
terms of barrels, India’s oil consumption is forecast to rise from 4.05
MBPD in FY22 to 7.2 MBPD in 2030 and 9.2 MBPD in 2050.
 Diesel demand in India is expected to double to 163 MT by 2029-30,
with diesel and petrol covering 58% of India’s oil demand by 2045.
 Natural Gas consumption is forecast to increase at a CAGR of 12.2%
to 550 MCMPD by 2030 from 174 MCMPD in 2021.
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 Indian refiners would add 56 million tones per annum
(MTPA) by 2028 to increase domestic capacity to 310
MTPA.
 India is planning to double its oil refining capacity to
450-500 million tones by 2030.
 The country’s share in global primary energy
consumption is projected to increase to two-fold by
2035.
 FDI Guidelines
 In July 2021 the department for promotion of Industry and Internal
Trade (DPIIT) approved an order allowing 100% foreign direct
investments (FDIs) under automatic route for oil and gas PSUs .
 The Government has allowed 100% Foreign Direct Investment (FDI)
in upstream and private sector refining projects.
 India's FDI inflows reached record levels, at US$ 84.84 billion during
2021-22. Service sector, Computer software and hardware and
Trading were the major receivers of FDI.
 Continued…..
 As per the World Investment Report 2022, India held the eighth position among
the primary global recipients of Foreign Direct Investment (FDI) until the year
2020
 Multinational companies (MNCs) have pursued strategic collaborations with top
domestic business groups, fueling an increase in cross-border M&A of 83% to
US$ 27 billion in 2020.
 The total amount of FDI inflows received during the last ten years (April 2014-
December 2023) was US$ 647.96 billion. This FDI has come from more than 170
countries that have invested across 33 UTs and States and 63 sectors in the
country.
Thank You