Natural Gas, Crude Oil, and Petroleum Refinery Products are amongst the eight core industries in India, which has a substantial impact on all other major economic sectors. Fast economic growth is leading to better outputs, which in turn is growing the demand of oil for production and transportation. According to the IEA (India Energy Outlook 2021), the primary energy demand is estimated to nearly double to 1,123 million tons of oil equivalent, as the country's GDP is projected to rise to $8.6 trillion by 2040.
India is planning to double its oil refining capacity to 450-500 million tons by 2030. Crude oil consumption is estimated to grow at a CAGR of 4.59% to 500 million tons by FY40 from 223.0 million tons in FY23. In terms of barrels, India’s oil consumption is expected to increase from 4.05 MBPD in FY22 to 7.2 MBPD in 2030 and 9.2 MBPD in 2050. The demand for Diesel in India is estimated to double to 163 MT by 2029-30, with petrol and diesel covering 58% of India’s oil demand by 2045. Demand is not likely to simmer down anytime soon, given strong economic growth and increasing urbanization. Although, Natural Gas consumption is estimated to rise at a CAGR of 12.2% to 550 MCMPD by 2030 from 174 MCMPD in 2021. Indian refiners would increase 56 million tonnes per annum (MTPA) by 2028 to rise domestic capacity to 310 MTPA.
Some initiatives have been implemented to boost India’s production and exploration segment and to modernize operations. Some of the policies are Hydrocarbon Exploration and Licensing Policy (HELP), a 99% decrease in 'No-Go' areas in Indian offshore zones, and the launch of the Urja Pragati Platform for faster clearances and easier compliance through self-certification, decreasing the number of approvals. Moreover, the creation of the National Data Repository (NDR) improves transparency and accessibility of vital energy sector data and information. India’s energy landscape is quickly evolving, with the country boasting 651.8 Million metric tons of recoverable crude oil reserves and 1,138.6 Billion cubic meters of recoverable natural gas reserves within its sedimentary basins. India's Exploration & Production (E&P) sector provides investment opportunities valued at $100 Billion by 2030.
Why Oil & Gas?
Strong Demand
The industrial growth and urbanization trend drive the demand for oil and gas. The demand for oil in India is expected to register a 2x growth to reach a target of 11 million barrels per day by 2045. Additionally, the consumption of natural gas in India is estimated to rise by 25 BCM, and registering an average annual growth of 9% till 2024.
Rapid Expansion
India is recently focusing to commercialize 50% of its Strategic Petroleum Reserves (SPR) to raise funds and build extra storage tanks to offset high oil prices. Moreover, Indian refiners might add 56 MTPA by 2028 to rise domestic capacity to 310 MTPA. Although, Indian refining capacity has increased from 215.1 Million MMTPA to 256.8 MMTPA in past 10 years.
Supportive FDI Guidelines
The Department for Promotion of Industry and Internal Trade (DPIIT) permitted an order allowing 100% Foreign Direct Investments (FDIs) in July 2021, under automatic route for oil and gas PSUs. Additionally, the Government has allowed 100% FDI in upstream and private sector refining projects.
Policy Support
In the previous budget of 2024-25, Rs. 497.25 crore ($59.75 million) has been allocated to scheme for Development of Pipeline infrastructure for injection of Compressed Biogas (CBG) in CGD Network. Additionally, In May 2022, the government approved variations in the Biofuel Policy to carry forward the target for 20% ethanol blending with petroleum to 2025-26 from 2030.
