India Oil and Gas Market Outlook to 2028

India Oil and Gas Market Overview

The India Oil and Gas market is valued at USD 433.8 billion, based on a five-year historical analysis. This market is primarily driven by the country's growing energy demand across industrial, transportation, and residential sectors. As one of the fastest-growing economies, India's need for energy resources continues to expand, with investments made to enhance oil refining capacity and increase natural gas production to meet both domestic and industrial demands.

Key cities such as Mumbai, New Delhi, and Jamnagar dominate the market. Jamnagar is home to one of the largest oil refineries in the world, operated by Reliance Industries, which gives it a central role in India's oil industry. Additionally, Mumbai serves as a key hub due to the presence of major oil companies, such as Oil and Natural Gas Corporation (ONGC), which operate offshore exploration activities. These cities have become central due to their infrastructural advancements and strategic positions along major transportation and energy corridors.

The Hydrocarbon Exploration Licensing Policy (HELP) introduced in 2016 simplified the licensing regime for oil and gas exploration in India. By 2024, under this policy, over 105 exploration blocks covering 156,580 square kilometers have been awarded through Open Acreage Licensing Programme (OALP) bidding rounds. This policy is aimed at boosting exploration and production in unexplored and underexplored areas, providing operators the flexibility to explore both conventional and unconventional resources.

India Oil and Gas Market Segmentation

By Product Type: Indias Oil and Gas market is segmented by product type into crude oil, natural gas, LNG, and refined petroleum products. Crude oil dominates the market primarily due to its essential role in refining processes that cater to transportation fuels, chemicals, and industrial usage. India's heavy reliance on crude imports, coupled with growing refining capacity, strengthens the dominance of this sub-segment. Furthermore, with expanding demand for transportation fuels, the refining and distribution of crude oil remain a critical part of the economy.

By Application: The market is also segmented by application into industrial use, power generation, transportation, and residential/commercial usage. Transportation has a dominant market share in Indias oil and gas sector due to the high demand for diesel and petrol, which powers the majority of Indias vehicles. With the country's growing vehicle population and inadequate public transportation infrastructure in many regions, reliance on gasoline and diesel fuels remains high, thus bolstering this segment's lead.

India Oil and Gas Market Competitive Landscape

The India Oil and Gas market is dominated by both public and private sector entities. Major players include Indian Oil Corporation Limited (IOCL), Oil and Natural Gas Corporation (ONGC), and Reliance Industries, among others. Public sector companies such as ONGC and IOCL enjoy market presence due to government backing and operational scale, while private companies like Reliance lead in refining capacity.

Company Name

Establishment Year

Headquarters

Refining Capacity (Barrels/ Day)

Natural Gas Infrastructure (Km)

LNG Terminals (Count)

Revenue (USD Bn)

Exploration Licenses (Count)

Sustainability Initiatives

Production Volume (Million Tonnes)

Indian Oil Corporation Ltd

1959

New Delhi

Oil and Natural Gas Corp.

1956

Dehradun

Reliance Industries Ltd

1966

Mumbai

Bharat Petroleum Corp. Ltd

1952

Mumbai

GAIL (India) Ltd

1984

New Delhi

India Oil and Gas Market Analysis

India Oil and Gas Market Growth Drivers

Energy Demand from Industrial Sector: India's industrial sector has witnessed a robust increase in energy demand, with oil and gas playing a critical role in fueling key industries such as manufacturing, power generation, and transportation. According to the World Bank, industrial consumption of energy reached around 360 million metric tonnes of oil equivalent (MTOE) in 2023, driven by large-scale infrastructure projects and increased manufacturing output. Additionally, the Indian economy is projected to grow steadily, with GDP expansion expected to sustain the need for energy, thereby strengthening the oil and gas sector. This trend positions the industry as a crucial enabler of India's industrial growth.

Urbanization and Infrastructure Development: Indias urban population has been expanding rapidly, with more than 480 million people living in urban areas by 2024, according to the United Nations. This urbanization is coupled with aggressive infrastructure development, including highways, smart cities, and housing projects, driving demand for oil and gas for construction, transportation, and other utilities. The Indian government allocated INR 10 lakh crore ($125 billion) for capital expenditure in its 2024 Union Budget, targeting infrastructure growth, which directly impacts energy consumption in the oil and gas industry. The urbanization trend is anticipated to continue contributing to the sector's expansion.

Increasing Domestic Refining Capacity: Indias domestic refining capacity is one of the largest in the world, with a total refining capacity of 250 million tonnes per annum (MTPA) as of 2024. Public and private refiners are expanding capacity to meet domestic and international demand for refined petroleum products. For instance, Indian Oil Corporation and other companies are involved in upgrading existing refineries to produce cleaner fuels, in line with the countrys commitment to achieving environmental targets. This growth in refining capacity bolsters Indias self-reliance in oil processing and enhances its role as a refining hub.

India Oil and Gas Market Challenges

Exploration and Production (E&P) Regulatory Constraints: The Indian oil and gas industry faces regulatory challenges in exploration and production activities. The approval process for new oil fields and gas blocks, governed by policies such as the Hydrocarbon Exploration Licensing Policy (HELP), has been slow. India has only been able to develop around 70% of its sedimentary basins despite having a total sedimentary area of 3.14 million square kilometers as of 2024. This regulatory lag impacts timely exploration and development of resources, hindering the country's ability to enhance its domestic energy production.

Environmental Concerns and Compliance: Environmental regulations concerning the oil and gas sector have become increasingly stringent in India, particularly after the country committed to achieving net-zero carbon emissions by 2070. According to India's Ministry of Environment, Forest and Climate Change (MoE FCC), the sector is responsible for emissions, necessitating the adoption of cleaner technologies and emission control measures. Compliance with these regulations adds to operational costs for companies, especially in exploration, refining, and transportation, creating financial and operational challenges for the sector.

India Oil and Gas Market Future Outlook

Over the next five years, Indias oil and gas market is projected to experience substantial growth driven by several factors, including government initiatives to reduce import dependency, development of domestic oil and gas fields, and the expansion of the liquefied natural gas (LNG) infrastructure. The shift towards cleaner energy sources, particularly natural gas, is expected to increase demand for LNG. Furthermore, ongoing advancements in exploration technology and increased foreign direct investment will continue to shape the industry.

India Oil and Gas Market Opportunities

Foreign Direct Investments (FDI) in Oil and Gas Sector: The Indian oil and gas sector has seen a surge in Foreign Direct Investment (FDI), with the government allowing 100% FDI under the automatic route in many segments. In the financial year 2023, India attracted over $10 billion in FDI in petroleum refining and exploration activities, with global players investing in domestic oil companies. This influx of capital has spurred growth in both upstream and downstream activities, supporting expansion and modernization of infrastructure across the country.

Renewable Energy Integration in Oil and Gas Operations: India's oil and gas companies are increasingly integrating renewable energy into their operations to reduce their carbon footprint. Public sector companies like ONGC and Indian Oil are investing in solar and wind energy to power their oil fields and refineries. As of 2023, Indian Oil had installed over 240 MW of renewable energy capacity across its operations, contributing to a more sustainable business model. This integration of renewables offers an opportunity for companies to improve operational efficiency while addressing environmental concerns.
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