OIL and GAS Industry in India

As per a recent report, the oil and gas industry in India is anticipated to be worth US$ 139,814.7 million by 2015. With India’s economic growth closely linked to energy demand, the need for oil and gas is projected to grow further, rendering the sector a fertile ground for investment. To cater to the increasing demand, the Government of India has adopted several policies, including allowing 100 per cent foreign direct investment (FDI) in many segments of the sector, such as natural gas, petroleum products, and refineries, among others. The government’s participation has made the oil and gas sector in the country a better target of investment. Today, it attracts both domestic and foreign investment, as attested by the presence of Reliance Industries Ltd (RIL) and Cairn India.

 

During FY14, the total consumption of petroleum products in India was 158.2 million tonnes (MT). The share of fuels in the country's exports surged from 5.59 per cent in 2003-04 to 20.05 per cent during 2013-14. India is the fourth-largest consumer of oil and petroleum products in the world. Its energy demand is projected to touch 1,464 million tonnes of oil equivalent (Mtoe) by 2035 from 559 Mtoe in 2011. Furthermore, the country’s share in global primary energy consumption is anticipated to double by 2035.

 

According to data released by the Department of Industrial Policy and Promotion (DIPP), the petroleum and natural gas sector attracted foreign direct investment (FDI) worth INR. 31,501.55 crore (US$ 5.13 billion) between April 2000 and July 2014. Some of the major investments and developments in the oil and gas sector in India have been observed due to companies like ONGC Ltd, Reliance Industries Ltd (RIL), ONGC Videsh Ltd (OVL), Oil India Ltd (OIL), Essar, Larsen & Toubro, Indian Oil Corporation Ltd (IOCL) and GAIL (India) Ltd.

 

Government initiatives can be noted with steps taken by the committee of Ministry of Environment and Forests - India, who has given a go ahead to IOCL’s INR. 4,320 crore (US$ 703.81 million) liquefied natural gas (LNG) terminal project at Ennore, near Chennai. The proposed facility’s capacity will be five million tonnes per annum (MTPA). The terminal is expandable to 10-15 MTPA. This is part of the corporation’s INR. 56,000 crore (US$ 9.12 billion) investment plan for the 12th Five-Year Plan (2012-17).

 

By 2015-16, India’s demand for gas is set to touch 124 MTPA against a domestic supply of 33 MTPA and higher imports of 47.2 MTPA, leaving a shortage of 44 MTPA, as per projections by the Petroleum and Natural Gas Ministry of India. Moreover, Business Monitor International (BMI) predicts that India will account for 12.4 per cent of Asia-Pacific regional oil demand by 2015.