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Refining for the World

Fourth largest LNG importer after Japan, South Korea and China, India accounts for 7.4% of the total global trade.

The country has become world’s fastest growing energy market. 

India is the 3rd largest energy consumer and oil consumer in the world after China and USA. Oil & gas accounted for around 35 % share in India’s energy consumption.

Import of Crude oil during Apr-Nov, 2016 was 143.8 MMT (USD 45.4 bn), an increase of 9.3% over FY 15-16. Imports of petroleum products during Apr-Nov, 2016 was 24.6 MMT (USD. 6.6 bn), an increase of 29.3% over the last year.

  •  The demand for petroleum products is estimated to reach 244,960 MT by 2021-22
  •  Focus to reduce Oil and Gas imports dependence from 77 % to 67% by the year 2022
  •  Gas production will likely touch 90 bn cubic meter by 2040

 

100% FDI allowed in exploration activities of oil and natural gas fields under automatic route

49% FDI allowed in petroleum refining by the Public Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs under automatic route

Fore more details, FDI Policy 2017

HIGHLIGHTS

  • Largest exporter of petroleum products in Asia
  • Second largest refiner in Asia
  • Third largest consumer of crude oil and petroleum products in the world

Industry Scenario

India has emerged as a refinery hub.

India's current refining capacity stands at 230.1 MMPTA, comprising of 23 refineries. Indian Oil Corporation (IOC) emerged as the largest domestic refiner with a capacity of 69.2 MMTPA.
Top three companies - RIL, IOC and BPCL - contribute around 65.5% of India's total refining capacity while HPCL & CPCL contributes 6.7% & 5.1% respectively.

Consumption of petroleum products in India stood at 184.7 MMT in FY15-16, 194.6 MMT in FY16-17 and 98.6 MMT in 2017 (April to September). Moreover, during FY17, the production of petroleum products by fractionators was 3,458 ('000) MT.

The production of crude oil was 36.9 MMT during FY15-16 which is expected to reach 37.08 MMT in FY16-17. The production of petroleum products was 231.9 MMT during FY15-16 which is expected to reach 238.07 during FY16-17.

Growth Drivers

Oil gas GD
  • Global LNG Imports share

    7.4%

  • Oil consumption CAGR (2008-17)

    3.3%

  • Gas consumption CAGR (2007-16)

    2.3%

  • LPG sales growth (2016-17)

    4.9%

Key policies

Hydrocarbon Exploration & Licensing Policy (HELP)

Some of the features of the policy are: Open Acreage Licensing, Full Freedom for Marketing and Pricing, Single license for conventional & un-conventional hydrocarbons, Equal weightage of work programme & fiscal share, Low Royalty for Offshore Fields etc.
 

Discovered Small Fields Policy

This policy offers improved fiscal terms viz.no oil cess applicable on crude oil production, moderate royalty rates same as in NELP regime, no upfront signature bonus, pricing and marketing freedom for oil and gas and no carried interest by NOCs. This round has substantially removed regulatory burden on the operators and comes after 6 years (of NELP IX round).
 

New Exploration Licensing Policy (NELP)

Government of India formulated a policy called New Exploration Licensing Policy in 1997. The main objective was to attract significant risk capital from Indian and Foreign companies, state of part technologies, new geological concepts and best management practices to explore oil and gas resources in the country to meet rising demands of oil and gas.
 

Coalbed Methane (CBM) policy

Coalbed Methane (CBM), an unconventional source of natural gas is now considered as an alternative source for augmenting India’s energy resource. India has the fifth largest proven coal reserves in the world and thus holds significant prospects for exploration and exploitation of CBM. The prognosticated CBM resources in the country are about 92 TCF (2600 BCM) in 12 states of India. In order to harness CBM potential in the country, the Government of India formulated CBM policy in 1997 wherein CBM being Natural Gas is explored and exploited under the provisions of OIL Fields (Regulation & Development) Act 1948 (ORD Act 1948) and Petroleum & Natural Gas Rules 1959 (P&NG Rules 1959) administered by Ministry of Petroleum & Natural Gas (MOP&NG).
 

FDI Facts

  • FDI in petroleum & natural gas

  • FDI share w.r.t. total FDI received in India

  • FDI allowed under automatic route in Petroleum refining by PSU, without disinvestment of dilution of domestic equity in existing PSUs

  • FDI is allowed in 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 product pipelines, natural gas/pipelines, LNG Regasification infrastructure, market study and formulation and Petroleum refining in the private sector, under automatic route 

Recent Investments

  • October 2017 - India is likely to attract investments worth over USD 40 bn in the next five years in the oil and gas sector alone as several global oil companies like Saudi Aramco, BP Plc., Vedanta Resources and Total of France have shown interest in investing in world's fastest growing market

  • July 2017 - Royal Dutch Shell Plc, which has already invested USD 1 bn in India, has planned further investments in upstream and downstream segments of oil and gas sector, and is also doubling its employee base at its Shell Technology Centre Bangalore (STCB)

  • August 2016 - Norwegian chemical company Yara International ASA has entered into an agreement to acquire the Tata Chemicals Ltd’s Babrala urea plant and distribution business in Uttar Pradesh for USD 400 mn on a debt and cash free basis, including normalised net working capital.

  • January 2016 - Petrogas Pvt Ltd, a joint venture of Isomeric Holdings bhd of Malaysia and LEPL Venture Pvt Ltd of India, will collaborate with Krishnapatnam Port Co Ltd and the Government of Andhra Pradesh, to set up a Liquefied Natural Gas (LNG) regasification and floating storage terminal at Krishnapatnam Port in Nellore district with an investment of around USD 447.3 mn.

Major Investors