oil

1. INDIAN ECONOMY ASSIGNMENT
Submitted By: SYED MUSTAFA HASHMI
ENROLLMENT NUMBER: 01112488820
COURSE: B.COM (hons.) 4th
sem.
SUBMITTED TO: MEETA Ma’am

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Oil And Gas Industry
 Oil and gas sector is among the eight core industries in India and plays
a major role in influencingdecision makingforall the other important
sections of the economy.
 India’s economicgrowth is closely related to its energy demand,
therefore, the need for oil and gas is projected to grow more, thereby
making the sector quite conducivefor investment.
 The Government has adopted several policies to fulfil the increasing
demand.It has allowed 100% Foreign Direct Investment (FDI) in many
segments of the sector, includingnaturalgas,petroleum products and
refineries among others.Today,it attracts both domesticand foreign
investment as attested by the presence of Reliance Industries Ltd (RIL)
and Cairn India.
 According to IEA (India Energy Outlook2021), primaryenergy demand
is expected to nearlydouble to 1,123 million tonnes ofoil equivalent,
as the country's gross domesticproduct (GDP) is expected to increase
to USD 8.6 trillion by2040.
 Market Size
 India is expected to be one of the largest contributors to non-OECD
petroleum consumption growth globally.Crude Oil import rose
sharplyto US$ 101.4 billion in 2019-20 from US$ 70.72 billion in 2016-
17.

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 As of September 01, 2021, the sector’s total installedprovisional
refinery capacitystood at 246.90 MMT and IOC emerged as the
largest domesticrefiner, with a capacity of 69.7 MMT.
 In FY20, crude oil production in India stood at 32.2 MMT. Crude oil
production stood at 4.9 MMT in FY22 (April-May2021) and was 30.5
MMT for FY21. In FY20, crude oil import increased to 4.54 mbpd from
4.53 mbpd in FY19. Natural Gas consumption is forecast to reach
143.08 million tonnes (MT)by 2040. India’s LNG import stood at 33.68
bcm during FY20.
 According to the International EnergyAgency (IEA), consumption of
natural gas in India is expected to grow by 25 billion cubicmetres
(bcm), registeringan average annual growth of 9% until 2024.
 According to the International EnergyAgency (IEA), India’s medium-
term outlookfornatural gas consumptionremains solid due to rising
infrastructure and supportiveenvironment policies.Industrial
consumers are expected to account for ~40% of India’s net demand
growth. The demand is also expected to be driven by sectors such as
residential,transport and energy.
 India’s consumptionofpetroleum products grew 4.5% to 213.69 MMT
duringFY20 from 213.22 MMT in FY19. The total value of petroleum
products exported from the countryincreased to US$ 35.8 billion in
FY20 from US$ 34.9 billion in FY19.Export of petroleum products from
India increased from 60.54 MMT in FY16 to 65.7 MMT in FY20.
 Exports of petroleum products from India reached 56.8 MMT in FY21
from 60.5 MMT in FY16.
 As of June 31, 2021, Gas AuthorityofIndia Ltd. (GAIL) had the largest
share (57.56% or 18,834 kms) of the country’s natural gas pipeline
network (32,718 kms).
 Investments
 According to the data released by Department for Promotion of
Industryand Internal Trade Policy (DPIIT), FDI inflows in India’s
petroleum and natural gas sector stood at US$ 7.96 billion between
April 2000 and June 2021.

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 Followingare some of the majorinvestments and developmentsin
the oil and gas sector:
 In November 2021, Oil and Natural Gas Corp.Ltd (ONGC) announced
that it invested up to Rs. 6,000 crore (US$ ~800 million)in the
petrochemicals arm—ONGC Petro Additions Ltd.(OPaL)—to meet its
equityrequirements.
 In November 2021, Indian Oil,Bharat Petroleum Corporation Limited
and Hindustan Petroleum CorporationLimited haveannounced the
launch of Model Retail Outlet Scheme and a Digital Customer
Feedback Programme called Darpan@petrolpump.Three oil PSUs
have joined hands to launch Model Retail Outlets to enhance service
standards and amenitiesacross theirnetworks,which serve over 6
crore consumers every day.
 In September 2021, Indraprastha Gas Limited (IGL) signed a
memorandum ofunderstandingwith South Delhi Municipal
Corporation(SDMC) to build waste to energy plant in Delhi to fuel
vehicles.
 India aims to commercialise 50% of its SPR (strategic petroleum
reserves) to raise funds and build additionalstorage tanks to offset
high oil prices.
 In July 2021, IndianOil Petronas Pvt. Ltd. announced its plan to
establish a new brand for auto fuels retailingin India to further
expand its business operations in the country.
 In July 2021, Indian Oil Corporation (IOC)announced to establish
India’s first green hydrogen plant at Mathura refineryto introduce
green hydrogen activities and projects in oil and gas sector in the
country.
 In July 2021, Oil & Natural Gas Corporation(ONGC)announced to
spend Rs. 300 billion (US$4.03 billion)in FY22 to boost the oil & gas
output.
 To expand beyond the natural gas business,in July 2021, GAIL (India)
Ltd. announced to invest ~Rs. 5,000 crore (US$ 670.18 million)to
establish a portfolio ofrenewable energy targetinga capacity of at

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least 1 gigawatts and build plants forboth compressed biogas and
ethanol.
 In July 2021, Bharat Petroleum CorporationLtd.(BPCL) announced
plan to establish its first-generation ethanol productionplant in
Telangana at an estimated investment ofRs. 1,000 crore (US$ 134.04
million).
 In July 2021, ONGC, an upstream oil company,and NTPC announced
plan to expand the offshore wind energy development in India and
accelerate presence in the renewable energy space.
 In June 2021, ONGC Videsh is in the process to raise US$ 525 million in
overseas foreign moneyloans from a mixture of home and overseas
lenders to repaybonds maturingin the subsequent months.
 According to government data,India's natural gas production
increased by 22.7% YoY in April 2021, as Reliance Industries Ltd. and
its partner, BP plc, increased production in the KG-D6 block on the
east coast.
 In February2021, Petronet LNG announced its plans to increase in its
Dahej terminal's capacityby 29% to 22.5 million tonnes per annum
(mtpa)to meet the risingdemand.
 Key Indian oil retailers such as Bharat Petroleum and Hindustan
Petroleum have announced plansto increase the capacityof their
outlets in rural areas in 2021.
 In February2021, ONGC announced that byMay 2021, it would
increase natural gas output from a KG basin blockto 2.5-3 million
standard cubicmeters per day.
 In February2021, the government launched key oil & gas projects in
Assam, such as INDMAX Unit at Indian Oil’s Bongaigaon Refinery,Oil
India Limited's secondarytank farm at Madhuban,Dibrugarh and a
‘Gas CompressorStation’at Hebeda Village, Makum and Tinsukia
remotelyfrom Dhemaji in Assam.
 In February2021, the government launched key oil and gas projects
such as the Ramanathapuram – Thoothukudi natural gas pipeline and

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Gasoline Desulphurisation Unit at Chennai Petroleum Corporation
Limited,Manali.
 In February2021, IndianOil Corp.Ltd. signed a ‘statement of intent’
with Greenstat Hydrogen India Pvt. Ltd. to establish a centre of
excellence for Hydrogen value chain and other related technologies
such as hydrogen storage, fuel cells, etc.
 Foreign investors will haveopportunities to invest in projects worth
US$ 300 billion in India as the countrylooks to cut reliance on oil
import by 10% by 2022 according to Mr. Dharmendra Pradhan,
Minister of Petroleum and Natural Gas,Government of India.
 Government Initiatives
 Some of the majorinitiatives taken bythe Government ofIndia to
promote oil and gas sector are:
 In November 2021, India announcedthat it will release 5 million
barrels of crude oil from its strategic petroleum reserves in a
concerted effort to bring down global crude oil prices. This is roughly
equivalent to a day’s consumption in the country.
 In November 2021, the government has set up a committee to work
out measures needed to make natural gas available to power plants at
reasonablystable prices.
 In October 2021, the Union MinistryofPetroleum & Natural Gas
approved a revised project cost of Rs. 28,026 crore (US$ 3.8 billion)to
increase refining capacity–forthe ongoingNumaligarh Refinery
Expansion Project–from 3 mmtpa to 9 mmtpa
 In September 2021, Bharat Petroleum CorporationLtd.(BPCL)
announced its plan to invest over Rs. 1 lakh crore (US$ 13.66 billion),
over a period of five years, to enhance petrochemical capacityand
improverefiningefficiency, gas proliferation,upstream oil & gas
explorationand production and augment the (fuel)marketing
infrastructure
 In September 2021, Indian government approved oil and gas projects
worth Rs. 1 lakh crore (US$ 13.46 billion)in Northeast India.These
projects are expected to be completed by 2025.

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 In September 2021, India and the US agreed to expand theirenergy
collaboration byfocusingon emerging fuels.This was followed by a
ministerial conference of the US-India Strategic Clean Energy
Partnership (SCEP).
 In July 2021, the Department for Promotion ofIndustryand Internal
Trade (DPIIT) approved an order allowing100% foreign direct
investments (FDIs) under automaticroute for oil and gas PSUs.
 In July 2021, the Minister for Road Transport and Highways,Mr. Nitin
Gadkari inauguratedIndia’s first liquefied natural gas (LNG) facility
plant in Nagpur,Maharashtra.
 In July 2021, India diversified procurement forcrude by announcingits
first shipment from Guyana scheduled next month.This movealso
indicates a future roadmap forextended alliance with Guyana in the
oil & gas sector.
 In June 2021, the government announced that it will auction
unmonetised large oil and gas fields of state-owned ONGC and OIL to
boost hydrocarbon production.
 In February2021, Prime Minister Mr. Narendra Modi announced that
the Government ofIndia plans to invest ~Rs. 7.5 trillion (US$102.49
billion)on oil and gas infrastructure in the next five years.
 In Union Budget 2021, the government allocated funds worth Rs.
12,480 crore (US$ 1.71 billion)fordirect benefit transfer of LPG
(liquefied petroleum gas)and Rs. 1,078 crore (US$ 147.31 million)to
feedstock subsidyto BCPL/Assam Gas Cracker Complex.
 In Union Budget 2021, the Finance Minister announced to provide 1
crore more LPG connections under Pradhan Mantri Ujjwala Yojana
(PMUY) scheme.
 The Ministryof Petroleum and Natural Gas released a draft LNG policy
that aims to increase the country's LNG re-gasification capacityfrom
42.5 million tonnes per annum (mtpa)to 70 mtpa by 2030 and 100
mtpa by 2040.
 The Ministryof Petroleum and Natural Gas released an ‘Ethanol
Procurement Policy’ on a long-term basis under the ‘Ethanol Blended

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Petrol (EBP) Programme’ (October 11, 2019), which covers modalities
for long-term ethanol procurement,proposedmechanisms forlong-
term procurement contracts,pricing methodologyand other topics.
 As per Union Budget 2019-20, Indian Scheme ‘Kayakave Kailasa’,the
Ministryof Petroleum & Natural Gas has enabled SC/ST entrepreneurs
in providingbulkLPG transportation.State run energy firms, Bharat
Petroleum, Hindustan Petroleum and Indian Oil Corporation,plan to
spend US$ 20 billion on refineryexpansions to add units by2022.
 The Government is planningto set up around 5,000 compressed
biogas (CBG) plants by2023.
 The Government is planningto invest US$ 2.86 billion in the upstream
oil and gas production to double natural gas productionto 60 bcm
and drill more than 120 exploration wells by2022.
 Road Ahead
 Energy demand of India is anticipatedto grow faster than energy
demand of all majoreconomies on the back of continuous robust
economic growth. India’s energy demand is expected to double to
1,516 Mtoe by 2035 from 753.7 Mtoe in 2017. Moreover, the
country’s share in global primaryenergy consumptionis projected to
increase by two-fold by 2035.
 Crude oil consumption is expected to grow at a CAGR of 3.60% to 500
million tonnes by2040 from 221.56 million tonnes in 2017.
 India’s oil demand is projected to rise at the fastest pace in the world
to reach 10 million barrels per dayby 2030, from 5.05 million barrel
per day in 2020.
 Natural Gas consumption is forecast to increase at a CAGR of 4.18% to
143.08 million tonnes by2040 from 58.10 million tonnes in 2018.
 Diesel demand in India is expected to double to 163 MT by 2029-30,
with diesel and gasoline covering58% of India’s oil demand by2045
 As per preliminarydata ofgasoline sales,fuel consumption in India
registered growth in June 2021 and is expected to further recover by

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end-2021. Gasoline sales bystate refiners stood at 2.12 million tonnes
in June 2021, registeringan increase of 5.7% YoY.
India is set to expand India’s natural gas grid to 34,500 kms by adding
another 17,000 km gas pipeline.The regasification capacityofthe
existing42 MMT per annum will be expanded to 61 MMT per year by
the year 2022.
Problem Faced By Oil And Gas Industry
 Reducingcosts to remain competitive
 Producingcrude oil and refined products at a lower cost to stay
competitiveon the market is one of the industry’s majorchallenges.
Optimizingproductionsystems and environmentalutilities on
currentlyoperatingsites is therefore a priorityfor the oil industry.
This maximizes production efficiency,reduces the costs of extraction
and refiningand thereby offsets the explorationcosts.
 > Improving performance to ensure the valorization ofassets
 To sustain theirsupplyofcrude oil or gas, oil companies are lookingto
extend the life of mature sites but are also compelledto seeknew
sources of oil or gas for which extraction,transport and refiningare
much more complex and costly. For that,they aim to achieve100%
reliabilityoftheirplants : no unplanned shutdowns,increased
throughput ,secure industrial assets.
 > Improving the Environmental footprintto meet increasingly
stringent standard
 The oil and gas industryis a majorconsumer of water and energy
resources and is therefore subject to increasinglystringent
environmentalstandards.This constrainsthem to rethinkextraction,
production and distributionmethods in order to obtain or maintain
theirlicence to operate.
 They also haveto provide guarantees and ensure transparencyin the
environmentalmanagement oftheiractivities.
 In the Beijingarea in China for example, where water shortages are
becoming more frequent and where tacklingair pollution is a major

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central government commitment,environmental standardsare
particularlystrict.The standards governingwastewater discharges in
particularare currentlythe most demandingin the world. This is a
majorcompliance challenge for the industrial groups in the region,in
particularforSinopec. It is the largest refiningcompanyin Asia and
operates the Beijing Yanshan petrochemicalcomplex,one of the
largest refined petroleum products productionsites in the country.
 Government initiatives towardsoil And Gas industries
 Some of the majorinitiatives taken bythe Government ofIndia to
promote oil and gas sector are:
 In November2021, India announcedthat it will release 5 million
barrels of crude oil from its strategic petroleum reserves in a
concerted effort to bring down global crude oil prices. This is roughly
equivalent to a day’s consumption in the country.
 In November 2021, the government has set up a committee to work
out measures needed to make natural gas available to power plants at
reasonablystable prices.
 In October 2021, the Union MinistryofPetroleum & Natural Gas
approved a revised project cost of Rs. 28,026 crore (US$ 3.8 billion)to
increase refining capacity–forthe ongoingNumaligarh Refinery
Expansion Project–from 3 mmtpa to 9 mmtpa
 In September 2021, Bharat Petroleum CorporationLtd.(BPCL)
announced its plan to invest over Rs. 1 lakh crore (US$ 13.66 billion),
over a period of five years, to enhance petrochemical capacityand
improverefiningefficiency, gas proliferation,upstream oil & gas
explorationand production and augment the (fuel)marketing
infrastructure
 In September 2021, Indian government approved oil and gas projects
worth Rs. 1 lakh crore (US$ 13.46 billion)in Northeast India.These
projects are expected to be completed by 2025.
 In September 2021, India and the US agreed to expand theirenergy
collaboration byfocusingon emerging fuels.This was followed by a

11. 11
ministerial conference of the US-India Strategic Clean Energy
Partnership (SCEP).
 In July 2021, the Department for Promotion ofIndustryand Internal
Trade (DPIIT) approved an order allowing100% foreign direct
investments (FDIs) under automaticroute for oil and gas PSUs.
 In July 2021, the Minister for Road Transport and Highways,Mr. Nitin
Gadkari inauguratedIndia’s first liquefied natural gas (LNG) facility
plant in Nagpur,Maharashtra.
 In July 2021, India diversified procurement for crude by announcingits
first shipment from Guyana scheduled next month.This movealso
indicates a future roadmap forextended alliance with Guyana in the
oil & gas sector.
 In June 2021, the government announced that it will auction
unmonetised large oil and gas fields of state-owned ONGC and OIL to
boost hydrocarbon production.
 In February2021, Prime Minister Mr. Narendra Modi announced that
the Government ofIndia plans to invest ~Rs. 7.5 trillion (US$102.49
billion)on oil and gas infrastructure in the next five years.
 In Union Budget 2021, the government allocated funds worth Rs.
12,480 crore (US$ 1.71 billion)fordirect benefit transfer of LPG
(liquefied petroleum gas)and Rs. 1,078 crore (US$ 147.31 million)to
feedstock subsidyto BCPL/Assam Gas Cracker Complex.
 In Union Budget 2021, the Finance Minister announced to provide 1
crore more LPG connections under Pradhan Mantri Ujjwala Yojana
(PMUY) scheme.
 The Ministryof Petroleum and Natural Gas released a draft LNG policy
that aims to increase the country's LNG re-gasification capacityfrom
42.5 million tonnes per annum (mtpa)to 70 mtpa by 2030 and 100
mtpa by 2040.
 The Ministryof Petroleum and Natural Gas released an ‘Ethanol
Procurement Policy’ on a long-term basis under the ‘Ethanol Blended
Petrol (EBP) Programme’ (October 11, 2019), which covers modalities

12. 12
for long-term ethanol procurement,proposedmechanisms forlong-
term procurement contracts,pricing methodologyand other topics.
 As per Union Budget 2019-20, Indian Scheme ‘Kayakave Kailasa’,the
Ministryof Petroleum & Natural Gas has enabled SC/ST entrepreneurs
in providingbulkLPG transportation.State run energy firms, Bharat
Petroleum, Hindustan Petroleum and Indian Oil Corporation,plan to
spend US$ 20 billion on refineryexpansions to add units by2022.
 The Government is planningto set up around 5,000 compressed
biogas (CBG) plants by2023.
 The Government is planningto invest US$ 2.86 billion in the upstream
oil and gas production to double natural gas productionto 60 bcm
and drill more than 120 exploration wells by2022.