Operations

Oil and Gas Sector in India

India is continuing to move forward with market-oriented economic reforms that began in 1991. Recent reforms include liberalized foreign investment and exchange regimes, industrial decontrol, significant reductions in tariffs and other trade barriers, reform and modernization of the financial sector, significant adjustments in government monetary and fiscal policies, and safeguarding intellectual property rights.

Energy demand including oil & gas has increased in tandem with economic growth. India's petroleum product consumption has doubled in last fifteen years. Current consumption of petroleum products in the country is about 120 MMTPA. Production of oil in the country is around 33 MMTPA for last few years. India currently imports over 70% of its crude oil requirements. Economic growth is linked to the growth of energy sector and it is expected that oil demand in India would grow three fold by 2020. The demand for gas is expected to grow at a faster rate than oil. The large finds in the east coast of India are expected to ease the situation.

The search for and development of India's petroleum resources have now acquired an added urgency. This urgency stems from widening gap between the demands of the nation on the pat of vibrant industrial growth and the availability of oil and natural gas to fuel this growth. One of the great success stories in the six decades since independence has been the growth and development of the Indian petroleum industry. In the past 60 years, the country witnessed growth of oil production from a mere 0.25 MMT of oil and 3 billion cubic feet of gas in 1947-48 to around 33 MMT today. What started off as a minuscule production from one small oil field in the rain forests of upper Assam has today blossomed into major activity in several areas of onland and offshore of India.

The Government of India, with Directorate General of Hydrocarbons as a nodal agency, formulated the New Exploration Licensing Policy (NELP) in 1997-98 to provide a level playing field to all the parties to compete on equal terms for award of exploration acreage. Government of India's commitment to the liberalization process is reflected in NELP, which has been formulated keeping in mind the immediate need for increasing domestic production. This has been a landmark event in the growth of the upstream oil sector in India. The terms and conditions of this open and transparent policy rank amongst the most attractive in the world. To attract more investment in oil exploration and production, NELP has steered steadily towards a level playing field resulting in a healthy spirit of competition between National Oil Companies and private companies.

"The oil and gas sector in India is fast emerging as the new destination for world business. Opportunity and initiative make a perfect meeting ground for world technologies in petroleum and natural gas exploration, production, refining, distribution and marketing. The growing demand for energy has effected changes in the market environment and in policies, culminating in total decontrol of the petroleum sector since April 1, 2002. This has opened up the hydrocarbon sector of a country of one billion people where the demand has been growing at the rate of 5-6% per annum, well above the world average."
(excerpt from Ram Naik, Ministry of Petroleum & Natural Gas - Government of India - India Hydrocarbon Sector Spreads its Wings).