India Oil And Gas Profile
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Introduction

  • According to the International Energy Agency (IEA), coal/peat account for nearly 40 percent of India’s total energy consumption, followed by nearly 27 percent for combustible renewables and waste. Oil accounts for nearly 24 percent of total energy consumption, natural gas six percent, hydroelectric power almost 2 percent, nuclear nearly 1 percent, and other renewables less than 0.5 percent. Although nuclear power comprises a very small percentage of total energy consumption at this time, it is expected to increase in light of international civil nuclear energy cooperation deals. According to the Indian government, nearly 30 percent of India’s total energy needs are met through imports
  • IEA data for 2008 indicate that electrification rates for India were nearly 65 percent for the country as a whole. In urban areas, 93 percent had access to electricity compared to rural areas where electrification rates were approximately 50 percent. Roughly 400 million people do not have access to electricity in India
  • According to Oil & Gas Journal (OGJ), India had approximately 5.6 billion barrels of proven oil reserves as of January 2010, the second-largest amount in the Asia-Pacific region after China. India’s crude oil reserves tend to be light and sweet, with specific gravity varying from 38° API in the offshore Mumbai High field to 32° API at other onshore basins.
  • In 2009, India consumed nearly 3 million bbl/d, making it the fourth largest consumer of oil in the world. EIA expects approximately 100 thousand bbl/d annual consumption growth through 2011.

Regulation

  • Though the government has taken steps in recent years to deregulate the hydrocarbons industry and encourage greater foreign involvement, India’s oil sector is dominated by state-owned enterprises. India’s state-owned Oil and Natural Gas Corporation (ONGC) is the largest oil company and dominates India’s upstream sector. State-owned Oil India Limited (OIL) is the next largest oil producer. Other major state-run players include the Indian Oil Corporation (IOC) and the Gas Authority of Indian Limited (GAIL). In addition, the private Indian firm, Reliance Industries Limited, is becoming a significant operator in the oil sector and is the largest private oil and gas company in the country. Cairn India, a branch of UK-based Cairn Energy, and BG Exploration are also important private sector operators in the industry.
  • As a net importer of oil, the Indian government has policies aimed at increasing domestic exploration and production (E&P) activities. As part of an effort to attract oil majors with deepwater drilling experience and other technical expertise, the Ministry of Petroleum and Natural Gas created the New Exploration License Policy (NELP) in 2000, which for the first time permits foreign companies to hold 100 percent equity ownership in oil and natural gas projects. Despite this, international oil and gas companies currently operate a small number of fields.
  • India’s downstream sector is also dominated by state-owned entities. The Indian Oil Corporation (IOC) is the largest state-owned company in the downstream sector, operating 10 of India’s 18 refineries and controlling about three-quarters of the domestic oil pipeline transportation network. Reliance Industries opened India’s first privately-owned refinery in 1999, and has gained a considerable market share in India’s oil sector.

Upstream

  • India produced roughly 880 thousand barrels per day (bbl/d) of total oil in 2009 from over 3,600 operating oil wells. Approximately 680 thousand bbl/d was crude oil, the remainder was other liquids and refinery gain.
  • Most of India’s crude oil reserves are located offshore, in the west of the country, and onshore in the northeast. Substantial reserves, however, are located offshore in the Bay of Bengal and in Rajasthan state. India’s largest oil field is the offshore Mumbai High field, located north-west of Mumbai and operated by ONGC. Another of India’s large oil fields is the Krishna-Godavari basin, located in the Bay of Bengal. Block D6 in the Krishna-Godavari basin, operated by Reliance Industries, began oil production in September 2008.
  • The primary mechanism through which the Indian government has promoted new E&P projects has been the NELP framework. The latest round of auctions, NELP VIII, was launched in April 2009 and attracted nearly $1.1 billion in investment. India currently plans to launch the NELP IX bidding round in the third quarter of 2010
  • According to Oil and Gas Journal, India had approximately 38 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2010. The EIA estimates that India produced approximately 1.4 Tcf of natural gas in 2009, a 20 percent increase over 2008 production levels. The bulk of India’s natural gas production comes from the western offshore regions, especially the Mumbai High complex, though the Bay of Bengal and its Krishna-Godavari (KG) fields are proving quite productive. The onshore fields in Assam, Andhra Pradesh, and Gujarat states are also significant sources of natural gas production.
  • There have been several large natural gas finds in India over the last several years, predominantly offshore in the Bay of Bengal. ONGC announced a find in late 2006 in the Mahanadi basin off the coast of Orissa state, with an estimated 3 to 4 Tcf of reserves in place. In December 2006, ONGC announced a find of an estimated 21 to 22 Tcf of natural gas in place at the KG-DOWN-98/2 block off the coast of Andhra Pradesh in the KG basin. In addition, state-owned Gujarat State Petroleum Corporation (GSPC) holds an estimated 1.8 Tcf of natural gas reserves at the KG-OSN-2001/3 block in the KG area.
  • Reliance Industries’KG-D6 block holds estimated reserves of 11.5 Tcf and came online in April 2009. Of the nearly 1.4 Bcf/d of initial production, nearly half went to gas based power plants, the rest to fertilizer, LPG plants, and city gas distribution entities. After reaching a production peak of 2.8 Bcf/d in December 2009, Reliance decided in July 2010 to cap production of KG-D6 at 2.1 Bcf/d pending resolution of infrastructure and field maintenance issues. The power sector continues to receive the lion’s share of production allotments. Production from the KG basin is expected to double the country’s current natural gas output in coming years.

Active Companies

  • IndianOil is India's flagship national oil company with business interests straddling the entire hydrocarbon value chain – from refining, pipeline transportation and marketing of petroleum products to exploration & production of crude oil & gas, marketing of natural gas and petrochemicals. It is the leading Indian corporate in the Fortune 'Global 500' listing, ranked at the 98th position in the year 2011.

Crude Oils

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Midstream

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LNG

  • India began importing liquefied natural gas (LNG) in 2004. In 2008, India imported 372 Bcf of LNG, nearly 75 percent of it from Qatar, making it the sixth largest importer of LNG in the world. India imports LNG through both long-term contracts and spot shipments.
  • Currently, India has two operational LNG import terminals, Dahej and Hazira. India received its first LNG shipments in January 2004 with the start-up of the Dahej terminal in Gujarat state. Petronet LNG, a consortium of state-owned Indian companies and international investors, owns and operates the Dahej LNG facility with a capacity of 5 million tons per year (mtpa) (975 Bcf/y). India’s second terminal, Hazira LNG, started operations in April 2005, and is owned by a joint venture of Shell and Total. The facility has a capacity of 2.5 mtpa (488 Bcf/y), which may be expanded to 5 mtpa (975 Bcf/y) in the future.
  • The 5 mtpa (975 Bcf/y) LNG processing plant in Dabhol continues to face delays. Currently operating as a power plant, the LNG receiving terminal may be operational in 2011 after dredging operations are complete so that a breakwater can be built.
  • In addition, Petronet LNG has begun construction of a 2.5 mtpa (488 Bcf/y) LNG import facility at Kochi. The facility is expected to be completed in the first quarter of 2012 and has secured a 1.5 mtpa (293 Bcf/y) supply from Australia’s Gorgon LNG project.
  • In order to secure supply of natural gas to India and meet growing demand, India is currently looking to invest in liquefaction projects abroad. For example, ONGC and the UK-based Hinduja Group are considering service contracts in Iran to supply 5 mtpa (975 Bcf/y) of LNG to India. The country is also exploring the possibility of investing more in the Sakhalin I LNG project.
  • Long-term growth in demand for LNG remains unclear however, as price is an issue of contention in India and increasing domestic natural gas production is expected from eastern offshore fields. Industry analysts note that Indian companies appear unwilling to commit to long-term LNG supply contracts at international prices. While negotiations are currently underway for several long-term LNG supply deals, whether or not India’s bids will be accepted is questionable in light of the low prices that India has offered to pay. Instead, India is becoming an important destination for spot LNG cargoes

Downstream

  • Nearly 70 percent of India’s crude oil imports come from the Middle East, primarily from Saudi Arabia, followed by Iran. The Indian government expects this geographical dependence to rise in light of limited prospects for domestic production.
  • According to OGJ, India had 2.8 million bbl/d of crude oil refining capacity at 18 facilities as of January 1, 2010.
  • India has the fifth largest refinery capacity in the world.

Refineries in India

Indian Oil Refineries

Others

Indian Refining Projects

  • In 2009, privately-owned Reliance Industries added another refinery to its Jamnagar complex to raise the entire complex’s refining capacity from 660,000 bbl/d to 1.24 million bbl/d. The Jamnagar complex is the largest oil refinery complex in the world.
  • Other key upcoming refinery projects include Essar Oil’s Vadinar refinery expansion of 110,000 bbl/d in 2011, 120,000 bbl/d greenfield refinery in Bina in 2011 by a joint venture between Bharat Petroleum Corporation Limited and Oman Oil Company Limited, a 180,000 bbl/d grassroots refinery in Bhatinda in 2014 by Hindustan Petroleum Corporation Limited, and IOC’s grassroots Paradeep refinery of 300,000 bbl/d in 2015.
  • India is slated to add 840 thousand bbl/d of refining capacity through 2015 based on currently proposed projects.
  • Due to expectations of higher demand for petroleum products in the region, further investment in the Indian refining sector is likely. As part of the country’s 11th Five Year Plan from 2007 to 2012, the government would like to promote India as a competitive refining destination, and industry experts expect the country to be an exporter of refined products to Asia in the near future

Complete List of Indian Refinery Projects

Relevant Links

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