Oil and gas industry overview - Global - India - report 2024

The oil and gas industry is a complex, global sector involved in the extraction, refining, and distribution of petroleum and natural gas, which are crucial for powering economies. It is typically divided into three main segments: upstream (exploration and production), midstream (transportation and storage), and downstream (refining and marketing). The industry is capital-intensive, technologically driven, and faces challenges related to energy demand, price volatility, and the transition to lower-carbon energy sources.  

Industry segments

        Upstream: Involves finding and extracting crude oil and natural gas from reservoirs. This includes activities like geological surveys, acquiring land rights, and drilling (both onshore and offshore). 
Midstream: Focuses on the transportation and storage of oil and gas from production sites to refineries or end markets. This segment includes pipelines, storage tanks, and terminals. 

     Downstream: Covers the refining of crude oil into products like gasoline and diesel, and their sale to consumers. It also includes the processing and distribution of natural gas and the sale of petroleum products through retail outlets. 

Key aspects of the industry

·        Economic significance: Oil and gas are primary global energy sources and play a major role in the economy, powering transportation, industry, and electricity generation. 

·        Complexity and capital investment: The industry involves highly complex, capital-intensive processes that require significant investment in technology and infrastructure. 

·        Global nature: It is a global industry, with countries importing and exporting crude oil, refined products, and liquified natural gas (LNG) to meet demand. 

·        Strategic importance: The control and supply of oil and gas have historically been central to national security and international relations. 

·        Future outlook: The industry is navigating a transition to lower-carbon energy. Some oil and gas companies are involved in developing new energy sources like hydrogen, carbon capture, offshore wind, and liquid biofuels, utilizing their existing skills and infrastructure. 

Challenges and opportunities

·        Price volatility: The industry is subject to fluctuations in oil and gas prices, which can significantly impact profitability. 

·        Demand growth: Driven by economic growth in many developing nations, the demand for oil and gas continues to rise. 

·        Energy transition: Companies must balance current energy production with investing in and adapting to a future with more renewable energy sources and lower emissions. 

·        Infrastructure bottlenecks: In some regions, the growth in production has outpaced the development of transportation infrastructure, creating bottlenecks.

INDIA 

India's oil and gas industry is a major economic sector, covering everything from exploration to marketing. It is a net importer of crude oil and natural gas but a significant refiner and exporter of petroleum products, ranking among the top global refiners. The industry is responding to growing energy demand through policy reforms, increased exploration, and investment in technology and safety standards. 

Key aspects of the industry

Comprehensive value chain: The industry includes upstream (exploration and production), midstream (transportation and storage), and downstream (refining and marketing) activities. 

·        Major consumer and importer: As the world's third-largest oil consumer, India relies heavily on imports to meet its high demand. It imported 234.3 MMT of crude oil in FY24. 

·        Significant refining and exporting power: India is among the top five global refiners and the seventh-largest exporter of refined products, thanks to robust infrastructure and facilities like the Jamnagar refinery. 

·        Growing natural gas market: Natural gas consumption is expected to grow significantly, with a 60% increase projected by 2030. The country is the fourth-largest importer of liquefied natural gas (LNG). 

·        Government policies and initiatives: The government has implemented policies like the hydrocarbon Exploration and Licensing policy to boost domestic production. 

·        Significant progress has been made in streamlining the approval process for exploration activities. 

·        There are initiatives to increase exploration acreage and access new frontiers, like the Andaman basin. 

·        Investment and FDI: The sector attracts significant domestic and foreign investment, with 100% foreign direct investment (FDI) allowed in many segments.  

·        Safety and regulation: The Oil Industry Safety Directorate (OISD) develops and enforces safety standards across the sector. 

·        Key players: Major companies include public sector undertakings (PSUs) and private companies like Reliance Industries Ltd. and TATA Petrodyne Ltd. 

·        Future outlook: The International Energy Agency projects that India will be the largest source of global oil demand growth between 2024 and 2030. 

  

India Report 2024

In 2024, India's oil and gas industry saw increased consumption of petroleum products, particularly HSD, MS, and ATF, while natural gas production and LNG imports grew. Refining capacity expanded, and crude oil imports rose to meet demand. The industry also saw growth in LPG connections under the PMUY scheme and an increase in the natural gas pipeline network. 

Key developments and trends

·        Consumption: Petroleum product consumption grew by 3.4% during April-Dec 2024 compared to the previous year, driven by HSD, MS, ATF, and LPG. 

·        Natural gas available for sale increased by 7.1% in April 2024 over the previous year. 

·        Production and imports: Gross natural gas production in April 2024 was up by 7.8% compared to April 2023. 

·        LNG imports for April 2024 increased by 5.4% over the prior year. 

·        Crude oil production remained steady, with public sector undertakings (PSUs) contributing 78% of the production in April 2025. 

·        Refining capacity increased to 256.8 MMTPA in FY24 and 258.1 MMTPA in FY25. 

·        Infrastructure and access: The number of operational natural gas pipelines grew to 24,945 km in 2024 from 15,340 km in 2014. 

·        The number of LPG connections under the PMUY scheme reached 10.33 crore, and the total number of LPG connections grew to 32.83 crore in 2024. 

·        Policy and outlook: The government implemented policies like the Hydrocarbon Exploration and Licensing Policy (HELP) to encourage exploration and production. 

·        India is projected to drive global oil demand growth, with consumption expected to reach 5.74 million bpd in 2025. 

·        The Ministry of Petroleum and Natural Gas is focusing on policies to promote E20 petrol, which is available at over 17,400 retail outlets across the country. 

Where to find detailed reports

·        Petroleum Planning & Analysis Cell (PPAC): For monthly and yearly statistics on production, consumption, and imports. 

·        Directorate General of Hydrocarbons (DGH): For reports on exploration and production activities. 

·        Indian Institute of Petroleum Industry (FIPI): For policy and economic reports on the oil and gas market. 

·        Ministry of Petroleum & Natural Gas: For official year-end reviews and policy announcements. 

·        Ministry of Statistics and Programmed Implementation (MOSPI): For comprehensive energy statistics. 

Public and private sector leaders

·        Reliance Industries Limited (RIL): A major private sector player with dominant stakes in refining and petrochemicals, showing strong revenue and profit growth. 

     Oil and Natural Gas Corporation (ONGC) : A government-owned company that focuses on the upstream exploration and production of oil and gas. 

      Indian Oil Corporation (IOC) : A key public sector company in the downstream sector, particularly in oil marketing. 

     Gujarat State Petronet Limited (GSPL) : Operates a significant part of the national gas grid. 

·        GAIL (India) Limited : Another key government-owned entity involved in the national gas grid.

Key external players

·        Russia: Surpassed other nations to become India's largest crude oil supplier in 2024, accounting for 31% of the market share. 

Other significant entities

Petroleum and Natural Gas Regulatory Board (PNGRB) : A regulatory body that has introduced reforms like the Unified Tariff for natural gas pipelines to create "One Nation, One Grid and One tariff". 

·        Federation of Indian Petroleum Industry (FIPI) : Represents the industry on various government bodies and acts as a key interface between the industry and regulatory authorities. 

·        Enro: An Indian company that manufactures systems and has a strong focus on export orders for projects in the Middle East.