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World’s fastest growing energy market

India is the 3rd largest energy and oil consumer in the world after China and the US. Oil and gas occupied approximately 35% share in India’s energy consumption.

India is the fourth largest importer of liquefied natural gas (LNG) after Japan, South Korea and China, accounting for 7.4% of the total global trade.

Import of crude oil during April-November 2017 stood at 144.7 MMT valued at approximately USD 51.1 bn, marking an increase of 9.31% in quantity terms and 15.3% in value terms compared to the same period of last year. While, imports of petroleum products during April-November 2017 were 23.76 MMT valued at approximately USD 7.9 bn, which shows decrease of 4.91% in quantity terms but increase of 21% in value terms compared to the corresponding period of previous year.

  •  The demand for petroleum products is estimated to reach 244,960 MT by 2021-22
  •  India aims to reduce oil and gas imports dependence from 77 % to 67% by 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

For 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, which is second largest refiner in Asia after China, is emerging as a refinery hub with refining capacity exceeding demand.

India's current refining capacity stands at 247.5 MMPTA, comprising of 23 refineries—18 under public sector, 3 under private sector and 2 in joint venture. Indian Oil Corporation (IOC) is the largest domestic refiner with a capacity of 69.2 MMTPA. Top three companies – IOC, Bharat Petroleum Corporation (BPCL) and Reliance Industries (RIL) - contribute around 65.5% of India's total refining capacity.

India has witnessed steady increase in production as well as consumption of petroleum products over the years. The production of petroleum products stood at 231.9 MMT during 2015-16, 243.6 MMT during 2016-17 and is expected to reach 254.4 during 2017-18. While, consumption of petroleum products stood at 184.7 MMT in 2015-16, 194.6 MMT in 2016-17 and is expected to be 204.9 MMT in 2017-18.

The production of crude oil stood at 36.9 MMT during 2015-16, 36 MMT during 2016-17 and is expected to be 37.4 in 2017-18.

Growth Drivers

Oil gas GD
  • Share in global LNG imports

    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

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 projected 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 and Natural Gas (MOP&NG).

Discovered Small Fields Policy

The policy offers improved fiscal terms such as 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.

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 and un-conventional hydrocarbons, equal weightage of work programme and fiscal share and low royalty for offshore fields, among others.

New Exploration Licensing Policy (NELP)

New Exploration Licensing Policy was formulated by Government of India in 1997. The main objective is 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 for oil and gas.

FDI Facts

  • FDI inflows (in USD) in April 2000 - December 2017

  • 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

  • May 2018 - RIKA Biofuels to invest USD 100-150 mn to build Bio CNG plants in Punjab

  • May 2018 - UAE state oil giant ADNOC plans to invest USD 45 bn in downstream expansion

  • 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