Oil and Gas sector in India

The oil and gas sector is pretty well developed in India, and contributes a large share to India’s energy basket and will be doing the same for the next 15–20 years. Oil and gas is a major part of the energy sector, which is essential for the growth of the manufacturing, utilities, infrastructure and commercial services industries. An estimated 7 per cent growth in the Indian economy is expected to approximately double India’s per capita energy consumption over the next 20 years. Since there is a link between energy demand and economic growth, the Indian oil and gas sector, which provides the country with a significant portion of its energy requirements, is a key metric that will drive future GDP growth. The future opportunities for the sector include assessing the feasibility of using non-conventional fuels such as coal bed methane, hydrogen and biodiesel. The sector must lay greater focus on developing midstream infrastructure, with specific attention on city gas distribution networks, and the construction of strategic storage facilities as a safeguard against short term disruptions in fuel supply. The government is constructing a total capacity of 15 million metric tons(MMT) in the form of strategic storage facilities for crude oil and petroleum products. As such this can be used as an emergency mechanism in the case of short term disruptions in fuel supply. In the first phase, the construction of the 5 MMT storage space has been started simultaneously at Vishakapatnam (1.3 MMT), Mangalore (1.5MMT) and Padur (2.5 MMT).

The proposed storage structure is expected to become underground. Effectively capitalising upon potential opportunities, clubbed with the increasing demand for natural gas, favourable government policies, large scale investments and the recent discovery offshore gas reserves are expected to fuel strong growth in the Indian oil and gas sector. State-run oil and gas companies in India must form partnerships or joint ventures with foreign players so as to effectively use the technology and monetary resources for ultradeep water exploration, which can yield significant results. Currently, Indian companies are only equipped with the technology that helps in exploring on land, or in shallow basins. The Indian oil and gas industry has been providing significant opportunities in the development of midstream infrastructure, with expected capacity addition of 6,000–8,000 km pipeline to the National gas grid in different parts of the country. Apart from this, the gas distribution network is not developed in most parts of the country except in cities such as Delhi and Mumbai. This particularly offers alternative fuel in the vehicular segment, which offers a 20 per cent cost benefit over diesel.