India Oil and Gas Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

India Oil and Gas Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The India Oil and Gas Market is expected to grow at a CAGR of more than 3% during the forecast period of 2022-2027. The Covid-19 pandemic has negatively affected the India Oil and Gas Market. The revenue for oil and gas companies declined on the note of unexpected lockdown, and the demand for diesel, the most used fuel in the country, has fallen due to a significant reduction in traffic volumes on the roads. Factors such as increasing natural gas pipeline capacity and increasing demand for petroleum products are expected to drive the Indian oil and gas market during the forecast period. However, a huge dependence on imports of crude oil and natural gas for satisfying domestic demand and high volatility of crude oil prices is expected to hinder the growth of the Indian oil and gas market.

Key Highlights

• The refining capacity has been growing considerably over the recent past, owing to the expansion of several refinery projects. Therefore, the downstream sector is expected to witness growth in the forecast period.
• There have been significant gas hydrates discoveries in the KG Basin. Economically feasible extraction of the gas hydrates may create immense opportunities for the companies and is likely to become a boom in natural gas production.
• Owing to the increase in gas imports, the Indian government is raising investments in oil and gas pipelines and LNG terminals across the country. Therefore increasing investments in the midstream oil and gas sector is expected to drive the market.

Key Market TrendsDownstream Sector to Witness Significant Growth

• The Indian energy demand is anticipated to grow by 50% in the next two decades. This growth in demand can be attributed to the growing world population and an improvement in living standards in developing countries. Even though new and renewable energy sources are gaining popularity around the world, petroleum fuel remains a major energy source globally. This trend is expected to continue for the next few decades and favors the growth of the oil and gas down-sector market.
• New Refineries were set to be established in various parts of the country. For instance, in August 2021, the Indian Oil Corporation Limited announced investing USD 15 billion to raise its refining capacity three times by 2025.
• Furthermore, in January 2021, State-run oil refiner Indian Oil’s board of directors approved setting up a new refinery in Nagapattinam in Tamil Nadu. The refinery is expected to have an annual refining capacity of 9 million metric tonnes and an investment of INR 31,500 crore.
• As of August 2021, the Indian oil group has a refining capacity of 80.2 MMTPA (Million Metric Tonne Per Annum) which accounts for 33% of the total national refining capacity (249.87 MMTPA). Moreover, the group has announced that it will boost its annual oil refining capacity to 87.55 million tonnes by 2025.
• Owing to several major upcoming projects, the downstream sector is expected to witness significant growth in the forecast period.

Increasing Investment in Mid-Stream Sector to drive the Market

• The pipeline is the most economical way of transportation of natural gas, crude oil, and petroleum product over a long distance due to increasing investments in upcoming pipelines in the country. The midstream segment is expected to contribute a decent share in the India Oil and gas market in the coming years.
• As of March 2020, the country has around 10,419 km of crude oil pipelines (onshore: 9,825 km, offshore: 594 km), 17,389 km of natural gas pipelines (onshore: 17,365 km, offshore: 24 km) 14,729 km of refined products pipelines. In addition to the pipelines, India has 6 LNG terminals, as of March 2020.
• As of June 31, 2021, the Gas Authority of India Ltd. (GAIL) had the largest share of the country’s natural gas pipeline network i.e., 32,718 km.
• As of 2020, Indian Oil Corporation accounts for 50.88% (5,301 km) of India’s crude pipeline network. The Indian government is set to invest USD 9.97 billion to expand the gas pipeline network across the country, culminating in the growth of the market.
• Moreover, in January 2020, the Indian government approved USD 774 million for a natural gas pipeline in the northeast region as part of a national gas grid being built to span remote locations in the country. The 1,656 km pipeline is expected to cost up to INR 92.65 billion to build and is expected to be completed by 2023.
• Hence, increasing investment in the midstream sector has been driving the Indian oil and gas market. Pipeline coverage is expected to increase substantially in the forecast period, with the petroleum product pipeline is expected to increase the most in the segment.

Competitive Landscape

The Indian oil and gas market is moderately consolidated. The major players are Oil and Natural Gas Corporation, Oil India Limited, Reliance Industries, Indian Oil Corporation Limited, and Punj Lloyd Limited.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
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