Oil and Gas

Summary
  • The Oil and Gas industry in India is set for a sea change with recent developmental ambitions of the Government of India – 175 GW of installed capacity of renewable energy by 2022, the aim to achieve 100 smart cities mission, 10% reduction of oil and gas import dependence by 2022 and provision of clean cooking fuels. 1
  • India is the third-largest consumer of fuel in the world but will soon reach the top as the per capita consumption in the country is on the rise.28
  • India is currently using only 6% of the world’s primary energy and the per capita consumption of energy is still one-third of the global average.20
  • The estimated conventional hydrocarbon resources in 26 sedimentary basins stood at 41.87 bn tonnes (oil and oil equivalent of gas), an enormous increase of about 49% in comparison to the earlier estimate of 28.08 bn tonnes. 3
  • India is the second-largest refiner in Asia after China. It is emerging as a refinery hub with refining capacity exceeding demand. 3 The country’s refinery capacity has increased to 247.57 MTPA. 4
  • By 2023-24, India is going to be 20% blending ethanol in our petrol products. Government promoting use of ethanol produced from sugarcane and food grains under EBP Programme.
Reasons to Invest
  • The growing economy and population growth are the main drivers for oil & gas demand, increasing every year.
  • Government aims to double the gas pipeline network from about 19,000 kms in 2021 in next 5 years.
  • India is one of the fastest-growing energy consumers. It is the third-largest consumer in the world after China and the USA. 5
  • National Data Repository (NDR) was set up on 28 June 2017, at the Directorate General of Hydrocarbons (DGH), to make the entire Exploration and Production (E&P) data available. This is mainly for commercial exploration, research and development and academic purposes. 5
  • National Gas Grid: India targets to have a gas-based economy and increase the share of natural gas in the primary energy mix of the country from 6.2% to 15%. The Government has approved a capital grant of INR 5,176 crore under Pradhan Mantri Urja Ganga to provide clean energy in the eastern part of the country. 5
  • OMCs have delivered 1413.38 lakh refills to PMUY beneficiaries under this Scheme as on 30.11.2020 and more than 7.5 Cr PMUY beneficiaries have availed free cylinders under the scheme.23
  • Supportive Government Regime — ease of doing business moved to industry-specific policy HELP (Hydrocarbon Exploration & Licensing Policy). The Policy has provisions for a single License for exploration and production of conventional as well as nonconventional Hydrocarbon resources, pricing and marketing freedom and reduced rate of royalty for offshore blocks among other benefits. 5 
  • India is a net exporter of petroleum products since FY 2001-02 and also the largest exporter of petroleum products in Asia since August 2009. 5
  • Two world-class gas hydrate reservoirs have been discovered under National Gas Hydrate Project-2 (NGHP-2). This has opened new avenues for alternative resources. 5
  • Investment opportunities are in the upstream sector, gas pipeline, city gas distribution (CGD) network, LNG terminal, development of underground coal gasification, coal to liquids, petrochemical and refinery. 5
  • India has agreed to release 5 mn barrels of crude oil from its Strategic Petroleum Reserves to control oil prices.
  • The Government has advanced the target of achieving 20% blended ethanol by 2025, which is commonly known as E20 target. 

Explore more about infrastructure availability in Oil and Gas sector >

Key Achievements
  • India is the fourth-largest refiner in the world with a total refining capacity of 247.57 MMTPA. 15
  • The target of providing LPG connections to 5 crore women belonging to the Below Poverty Line (BPL) under the “Pradhan Mantri Ujjwala Yojana” was achieved 8 months ahead of the schedule. 15
  • A total of 32 blocks covering approximately 59,000 sq. km area have been awarded under OALP bid Rounds II and III during the year 2019. Under bid round IV of OLAP, 7 Blocks with an area of approximately 18500 sq. km have been awarded. 16
  • 26.79 cr LPG customers are availing subsidy under PAHAL Scheme and nearly 9 lakh customers have joined this scheme in the month of September, 2020. As on 30.09.2020, more than 1.08 cr customers have given up LPG subsidy under the “Give it Up” initiative.18
  • The 2655 km Jagdishpur – Haldia&Bokaro – Dhamra Pipeline Project (JHBDPL) is being executed by GAIL at an investment of INR 12,940 crore, which includes 40% capital grant (i.e. INR 5,176 crore). JHBDPL will cater to the energy requirements of five states, namely Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal. 16
  • Under the City Gas Distribution Bidding, 86 Geographical Areas (GAs) in the 9th round and 50 GAs in the 10th round have been authorized. 16
  • L&T Hydrocarbon Engineering (LTHE) has been ranked as the ‘Top EPC Contractor in the Middle East’ by Oil & Gas Middle East magazine, the region’s leading publication focused on the upstream oil and gas industry.
  • Hon’ble PM dedicated Gasoline Desulphurization (GDS) Unit under CPCL-fuel Quality up-gradation project to the nation to boos the use of Gas.
  • Bina-Panki Multiproduct Pipeline Project is developed, extending from the Bina refinery in Madhya Pradesh to Panki in Kanpur and will help the region access petroleum products from the Bina refinery.
  • The LPG connections in the country have increased from 14 crore in 2014 to more than 30 crore in 2021. In Uttar Pradesh only, 1.60 crore families got new LPG connections.
  • The Oil Marketing Companies (OMCs) - Bharat Petroleum Corporation Limited (BPCL), Indian Oil Corporation Ltd (IOCL) and Hindustan Petroleum Corporation Limited (HPCL) have entered into a long-term purchase agreement (LTPA) for upcoming dedicated ethanol plants across India.
Recent Announcements

18th May 2022: Cabinet approves Amendments to the National Policy on Biofuels -2018.

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12th May 2022: GAIL awards contract to set up one of India’s largest PEM based Green Hydrogen project.

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11th May 2022: Leading Oil PSUs come together to sign Tripartite-cum-Escrow Agreement for upcoming dedicated ethanol plants.

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30th  April 2022: OIL signs MoU for Carbon sequestration and restoration of degraded forest land in Digboi.

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8th April 2022: OIL signs incubation agreement with Hydrogen Fuel related Start-up for promoting Hydrogen mobility solutions in Northeast.

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Statistics
  • The Oil and Gas industry in India ranks amongst India's 8 core industries.
  • India is the 3rd largest consumer of oil in the world, after the United States & China. 5
  • India has an estimated reserve of 1380.63 BCM of Natural Gas (as of 1st April 2019). 7
  • India has 247.57 MTPA of refining capacity with a surplus refining capacity of about 15%, making it the second-largest refiner in Asia after China. 8
  • In the Month of May, more than 3.9 lakh new LPG connections were issued. As on 31st May 2021, 27.23 crore LPG consumers are availing subsidy under PAHAL scheme. 
  • Ethanol Blending has Improved from 1.53% during Ethanol Supply Year 2013-14 to 7.93% ongoing ESY 2020-21.
  • Crude Oil Processed during July 2021 was 19383.64 TMT, which is 9.64% higher than July 2020
  • Natural Gas production (weight: 6.88 per cent) increased by 7.6 per cent in March, 2022 over March, 2021. Its cumulative index increased by 19.2 per cent during April to March, 2021-22 over the corresponding period of previous year.
  • Petroleum Refinery production (weight: 28.04 per cent) increased by 6.2 per cent in March, 2022 over March, 2021. Its cumulative index increased by 8.9 per cent during April to March, 2021-22 over the corresponding period of previous year.
  • Natural gas production during December 2021 was 2896.69 MMSCM, which is 19.45% higher than the production of December 2020.
  • Crude Oil Processed during December 2021 was 21482.88 TMT, which is 2.18% higher than the processing in December 2020. 
  • Production of Petroleum Products during December 2021 was 22754.72 TMT, which is 5.93% higher than production of December 2020 and 3.27% higher than target for the month. 
  • Share of natural gas in primary energy mix has increased from 6.3% to 6.7% from 2020 to 2021.
  • Exports of Petroleum products values at  USD 8255.39 mn in April 2022 and records positive growth vis-à-vis April 2021 of 127.69%. 
  • Petroleum product shares 20.24% of the total exports of the country in the month of April.
  • Exports of Petroleum product values at  USD 65044.80 mn from Apr21- Mar22 and records positive growth vis-à-vis Apr20-Mar21 of 152.07%. 
  • Petroleum products shares 15.57% of the total exports of the country in the period Apr21- Mar22.
  • The Average Index of Industrial Production of Manufacturing of coke and refined petroleum products in the FY 2021-22 is 121.1 and has grown by 8.9 percent.
Growth Drivers
  • The Natural Gas Grid (NCG) has promoted the usage of natural gas as a fuel/feedstock across the country to move towards a gas based economy. The development of additional 13500 km long gas pipeline is under way to complete the NGG. 9  
  • The Government of India has extensively boosted the expansion of City Gas Distribution (CGD) network coverage across the country to make natural gas available for the public. CGD networks ensure the supply of cleaner fuel (i.e. PNG) to households, Industrial & commercial units and transportation fuel (i.e. CNG) to vehicles. 9
  • The Direct Benefit Transfer Kerosene (DBTK) Scheme has been launched to bring reforms and better subsidy management in allocation and distribution of Public Distribution System (PDS) - Superior Kerosene Oil (SKO) distribution system9  
  • On 21st December, MOU was signed between CSIR-Indian Institute of Petroleum and Vietnam Petroleum Institute to promote cooperation in petroleum research and training.22
  • Initiatives which are driving growth in the Exploration and Production sector include: 9  
    • Gas pricing reforms
    • Policy framework for early monetization of Coal Bed Methane (CBM)
    • Discovered Small Field (DSF) Policy
    • Reform Initiatives to enhance Domestic Production
    • Hydrocarbon Exploration and Licensing Policy (HELP) coupled with operationalization of Open Acreage Licensing Policy (OALP)
    • Monetization of the Ratna offshore field
    • Permission of Extraction of Coal Bed Methane (CBM) to Coal India Limited (CIL) & its subsidiaries in Coal Mining area
    • Policy for the Grant of extensions to Pre-NELP Discovered fields and Exploration Blocks
    • Hydrocarbon Vision 2030 for North East
    • National Seismic Programme of Un-appraised areas
    • National Data Repository (NDR)
    • Policy framework to permit exploration and exploitation of unconventional hydrocarbons in existing acreage of Production Sharing Contracts (PSCs), Coal Bed Methane (CBM) contracts and Nomination fields
    • Policy framework for streamlining the working of PSCs
    • A policy framework to incentivise enhanced recovery methods for oil and gas
  • The Government is taking steps to enable the growth of the CGD sector in the country including allocating domestic natural gas to the CGD sector as a top priority under the no-cut category.26
  • Ujjwala 2.0 (Pradhan Mantri Ujjwala Yojana - PMUY) was launched by handing over LPG connections, at Mahoba UP with an objective to issue deposit-free LPG connections to one crore additional families.
  • Oil India Limited (OIL) signed an Incubation Agreement with the Start-up Ohm Clean Tech Private Limited on yesterday for Design, Integration and Development of 9-M Hydrogen Fuel Cell powered e-Bus, and a Liquid Organic Hydrogen Carrier (LOHC) solution.
  • Oil India Limited signed an MoU with Digboi Forest Division, Assam Forest Department for a project on Carbon Sequestration and Restoration of Degraded Forest Land in Upper Dihing Reserved Forest (west block) under Digboi Forest Division.
  • The Oil Marketing Companies (OMCs) - Bharat Petroleum Corporation Limited (BPCL), Indian Oil Corporation Ltd (IOCL) and Hindustan Petroleum Corporation Limited (HPCL) have entered into a long-term purchase agreement (LTPA) for upcoming dedicated ethanol plants across India.
  •  GAIL (India) Limited has awarded a contract to set up one of the largest Proton Exchange Membrane (PEM) Electrolyser in India. The Project has been designed to produce around 4.3 Metric Tons of Hydrogen per day (approx. 10 MW capacity) with a purity of about 99.999 Volume %. It is scheduled to be commissioned by November 2023. 
FDI Policy
  • The government has allowed up to 100% Foreign Direct Investment (FDI) under the automatic route, in the following: 10
    • Exploration activities of oil and natural gas fields,
    • Infrastructure related to marketing of petroleum products and natural gas,
    • Marketing of natural gas and petroleum products, petroleum products' pipelines, natural gas pipelines,
    • LNG regasification infrastructure, market study, formulation and petroleum refining in the private sector,
    • The policy of the government or private participation in the exploration of oil and the discovered fields of natural oil companies
  • 100% FDI under the automatic route for petroleum refiners and in those without any disinvestment or dilution of domestic equity in the existing PSUs at 49%.
  • To promote the usage and distribution of Liquefied Natural Gas (LNG), the Government has put LNG imports under Open General Licensing (OGL) category and the establishment of LNG infrastructure, including LNG terminals, is also under 100% FDI (automatic route).29
  • The cumulative FDI equity inflow in the Petroleum and Natural Gas is USD 7,981.92 mn during the period April 2000 to December 2021. This constitutes almost 1.39% of the total FDI inflow received across sectors.30

Read more about Foreign Direct Investment Policy in India >

Sector Policy

Hydrocarbon Exploration & Licensing Policy (HELP) 11

The new Hydrocarbon Exploration & Licensing Policy (HELP) has replaced the previous policy regime for exploration and production of oil and gas, known as New Exploration Licensing Policy (NELP). HELP provides a uniform licensing system to explore and produce all hydrocarbons such as oil, gas, coal bed methane, shale oil/gas, etc. under a single licensing framework.

Open Acreage Licensing Policy (OALP) 11

The Open Acreage Licensing Policy (OALP) was notified in 2017 by the GoI as a part of the Hydrocarbon Exploration and Licensing Policy (HELP). Under OALP, potential investors/ companies can view the surface and sub-surface geological, geophysical and other technical data on the National Data Repository (NDR) and submit Expressions of Interest round the year.

National Data Repository (NDR) 11

National Data Repository (NDR), a pre-requisite for making OALP operational is set up at the Directorate General of Hydrocarbons (DGH) to make the entire Exploration and Production (E&P) data available for commercial exploration, research and development and academic purposes.

Discovered Small Field Policy 11

With an aim to monetize hydrocarbon resources locked-in for years, the GoI approved the Discovered Small Field Policy. As an opportunity to increase domestic production of oil and gas, a total of 30 contracts for 43 discovered small fields were signed with 20 companies in March, 2017 under the first round of bidding. Under the second round, 59 discovered small fields/ unmonetized discoveries clubbed into 25 new contracts were offered for bidding in 2018.  These fields are estimated to have 194.65 MMT Oil and Oil equivalent gas.

National Policy on Biofuels 2018

With a target of 20% blending of ethanol in petrol by 2030, the National Policy on Biofuels 2018 has been notified by the Government of India. The policy is expected to boost the Biofuel programme of the country and has also widened the scope of raw material for ethanol procurement. 11 

According to the National Policy on Biofuel 2018 envisages a target of 20% blending of ethanol in Petrol by 2030. 

Following benefits are expected out of the new policy: 12

  • Reduce Import Dependency
  • Cleaner Environment
  • Health benefits
  • Municipal Solid Waste Management
  • Infrastructural Investment in Rural Areas
  • Employment Generation
  • Additional Income to Farmers

Amendments are done to the National Policy on Biofuels due to advancements in the field of Biofuels. These include 

  • To allow more feedstocks for production of biofuels,
  • To advance the ethanol blending target of 20% blending of ethanol in petrol to ESY 2025-26 from 2030,
  • To promote the production of biofuels in the country, under the Make in India program, by units located in Special Economic Zones (SEZ)/ Export Oriented Units (EoUs),
  • To add new members to the NBCC.
  • To grant permission for export of biofuels in specific cases, and
  • To delete/amend certain phrases in the Policy in line with decisions taken during the meetings of National Biofuel Coordination Committee.

Mission Purvodaya19

Mission Purvodaya emphasized harnessing the untapped potential of this region to fuel the next wave of national growth. This will drive Eastern India towards self-reliance and contribute in the making of an Aatmanirbhar Bharat. India is developing gas infrastructure including pipelines, LNG terminals and CGD network.

SATAT (Sustainable Alternative Towards Affordable Transportation)20

The target is to have 5000 compressed biogas plants of 15 MMT per year with an investment potential of US $ 20 bn.

The SATAT scheme aims to set up Compressed Bio-Gas production plants and make CBG available in the market for use as a green fuel.' SATAT’, launched on 1.10.2018, envisages targeting production of 15 MMT of CBG from 5000 plants by 2023.

 

Explore Government policies/ schemes in the Oil and Gas sector >

Financial Support
  • Union Budget 2022-23: The total budgetary allocation for FY 2022-23 towards the   Ministry of Petroleum and Natural Gas is INR  8,939.86 cr.
  • The Oil Industry Development Board, established under the Oil Industry (Development) Act, 1974 provides financial including loans and grants for development of the Oil Industry in India. 13
  • The National Policy on Biofuels 2018 indicates a viability gap funding scheme for 2G ethanol Bio refineries of INR 5000 crore in addition to tax incentives13
  • The Government of India has approved policy framework to promote Enhanced Recovery (ER), Improved Recovery (IR) and Unconventional Hydrocarbon (UHC) production methods/ techniques for Oil and Gas. The framework provides fiscal incentives in the form of partial waiver of royalty and cess13
  • To provide financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity, the Department of Food & Public Distribution has introduced a Scheme which aims to infuse INR 1,332 crore via Interest Subvention route13
  • The Ethanol Blended Petrol (EBP) programme is being implemented by the government through Oil Marketing Companies (OMCs) under which OMCs sell ethanol blended petrol with percentage of ethanol up to 10%. To support this initiative, the government has reduced the GST rate from 18% to 5% on ethanol meant for EBP programme13
Investment Opportunities
  • Under the Hydrocarbon Exploration & Licensing Policy (HELP), the exploration acreage has now reached to about 2,15,000 sq. km. after 4 successful bidding rounds of Open Acreage Licensing Programme (OALP). The future exploratory work commitment comprises of the following: 14
    • 29,270 line km of 2D Seismic Survey
    • 43,272 square km of 3D Seismic Survey
    • 369 Exploratory Wells
    • 290 core analysis to establish Shale Resources

These commitments have a potential to generate an investment of about USD 2.35 Bn in exploratory work alone. 14

  • Under the 2G Ethanol Programme, Oil Marketing Companies (OMCs) are in the process of setting up 12 2G bio-refineries for production of ethanol with an investment of about USD 1.33 Bn. 15
  • The Oil Industry Development Board provides financial and other assistance for development of Oil Industry in India. Strategic Petroleum Reserves Ltd. (ISRPL), a wholly owned subsidiary of Oil Industry Development Board (OIDB) has been mandated to build and operate strategic crude oil reserves15
  • Under Phase I of Strategic Petroleum Reserve (SPR) programme, the government (through ISRPL) has built SPR facilities with a total capacity of 5.33 MMT. For Phase II of the programme, Union Cabinet has already given “In Principle’ approval to establish 6.5 MMT Strategic Petroleum Reserves under PPP mode15
  • Shale Gas and Oil Exploration has immense opportunities in India and is also promoted of the government. The resources can be found in number of sedimentary basins (Gangetic plain, Gujarat, Rajasthan, Andhra Pradesh and other coastal areas) in India, including the hydrocarbon bearing ones – Cambay, Assam-Arakan and Damodar15
  • During the last 3 years, Indian companies have acquired strategic stakes in overseas assets in UAE, Oman, Israel and Russia.17
  • From April - December 2019 , equity oil and gas from overseas assets is 18.513 MMTOE.17 

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Foreign Investors
  • British Petroleum (UK)
  • Cairn Energy (India)
  • Shell (UK)
  • Niko Resources (Canada)
  • OILEX Limited (Australia)
  • Hardy Oil & Gas Plc. (UK)
Agencies
Sources
  1. "Energizing India", Niti Aayog, https://niti.gov.in/writereaddata/files/Energising-India.pdf 
  2. “Energy Statistics 2020”, Ministry of Statistics and Programme Implementation, http://www.mospi.gov.in/sites/default/files/publication_reports/ES_2020_240420m.pdf 
  3. Annual Report 2018-19, Ministry of Petroleum & Natural Gas, http://petroleum.nic.in/sites/default/files/AR_2018-19.pdf 
  4. “Energy Statistics 2020”, Ministry of Statistics and Programme Implementation, http://www.mospi.gov.in/sites/default/files/publication_reports/ES_2020_240420m.pdf
  5. Annual Report 2018-19, Ministry of Petroleum & Natural Gas, http://petroleum.nic.in/sites/default/files/AR_2018-19.pdf
  6. Snapshot of India’s Oil & Gas data, Petroleum Planning & Analysis Cell, https://www.ppac.gov.in/WriteReadData/Reports/202002190443145145160SnapshotofIndiasOil&Gasdata,January2020.pdf
  7. “Energy Statistics 2020”, Ministry of Statistics and Programme Implementation, http://www.mospi.gov.in/sites/default/files/publication_reports/ES_2020_240420m.pdf
  8. Annual Report 2018-19, Ministry of Petroleum & Natural Gas, http://petroleum.nic.in/sites/default/files/AR_2018-19.pdf
  9. Annual Report 2018-19, Ministry of Petroleum & Natural Gas, http://petroleum.nic.in/sites/default/files/AR_2018-19.pdf
  10. Consolidated FDI Policy, https://invest-india-revamp-static-files.s3.ap-south-1.amazonaws.com/2020-04/FDI%20Policy%202019%20revised_19%20April%202020.pdf
  11. Annual Report 2018-19, Ministry of Petroleum & Natural Gas, http://petroleum.nic.in/sites/default/files/AR_2018-19.pdf
  12. Cabinet approves National Policy on Biofuels – 2018, Ministry of Petroleum & Natural Gas, PIB, https://pib.gov.in/Pressreleaseshare.aspx?PRID=1532265
  13. Ministry of Petroleum & Natural Gas, Annual Report 2018-19, http://petroleum.nic.in/sites/default/files/AR_2018-19.pdf
  14. “Ministry of Petroleum and Natural Gas signs Contracts for 7 Blocks Awarded under Open Acreage Licensing Programme (OALP) Bid Round – IV”, PIB, https://pib.gov.in/PressReleseDetailm.aspx?PRID=1598294
  15. Ministry of Petroleum & Natural Gas, Annual Report 2018-19, http://petroleum.nic.in/sites/default/files/AR_2018-19.pdf
  16. Year End Review - 2019 of Ministry of Petroleum & Natural Gas, PIB, https://pib.gov.in/PressReleseDetail.aspx?PRID=1596830 
  17. Ministry of Petroleum & Natural Gas, Annual Report 2018-19, http://petroleum.nic.in/sites/default/files/AR_2018-19.pdf
  18. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1673979
  19. Ministry of Petroleum & Natural Gas, Monthly Summary http://petroleum.nic.in/sites/default/files/monsumm_oct20.pdf
  20. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1677636
  21. PIB Release, https://pib.gov.in/PressReleseDetail.aspx?PRID=1685110
  22. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1682468
  23. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1685110
  24. Ministry of Petroleum & Natural Gas, Monthly Summary, http://petroleum.nic.in/sites/default/files/summrepdec2020.pdf
  25. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1690790
  26. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1703234
  27. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1704803
  28. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1705113
  29. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1705401
  30. FDI Factsheet from DPIIT for April 2000 and December 2021, https://dpiit.gov.in/sites/default/files/FDI%20Factsheet%20December%2C%202021.pdf

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