Executive Summary
Current Market Trends:
Recent Market Trends
Competitive Landscape
Best Prospects
Market Entry
Regulations / Registration Process
Technical Barriers & Tariffs
Procurement & Tenders
Upcoming Trade Events
Local Industry Resources
U.S. Commercial Service Information
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Executive Summary
Current Market Trends:
Recent Market Trends
Competitive Landscape
Best Prospects
Market Entry
Regulations / Registration Process
Technical Barriers & Tariffs
Procurement & Tenders
Upcoming Trade Events
Local Industry Resources
U.S. Commercial Service Information
Executive Summary
Traditionally, public sector undertakings, also known as government owned companies, have dominated India’s oil and gas sector. They account for 80% of domestic oil and gas production and nearly 70% of the refining capacity. In recent years, the Government of India (GOI) has taken steps to deregulate the industry and encourage greater private participation and foreign investment. This has resulted in a slow but steady growth of private sector activity.
Current Market Trends
The GOI has announced plans to raise the share of natural gas in India’s energy mix from the current 7.6% to 15 % by 2030. Currently, half of India’s supply of natural gas comes from domestic production while the other half comes from imported liquified natural gas (LNG). However, industry experts expect rising demand to result in a 30% domestic/70% imported LNG supplier mix by 2025.
Anticipating future demand, India broadened its international supplier base and negotiated long-term supplier contracts with countries such as the United States and Russia, which both exported their first LNG shipments to India in 2018.
However, India now faces the challenge of building its gas infrastructure to receive LNG shipments, and distribute the gas to its population across a wide geographical area. Currently, India has six operating LNG terminals and several more coming on-line. Over 18,820 km of product pipelines, 10,419 km of crude oil pipelines and 32,728 km of natural gas pipelines are operational, with additional pipelines under construction. The upcoming City Gas Distribution (CGD) projects are expected to cover 86% of India’s geography, reaching 96% of the population providing several opportunities for U.S. companies to partner with Indian companies in the Indian market.
India is the world’s fourth largest buyer of LNG, after Japan, South Korea, and China, with international purchases expected to rise to support the increasing demand for natural gas and the government’s promotion of a cleaner environment.
India currently has six LNG receiving terminals in operation – Petronet’s 15 million tons annually (mta) Dahej and 5 mta Kochi LNG terminals, Shell’s 5 mta Hazira installation, and the 5 mta Dabhol terminal operated by Ratnagiri Gas and Power (GAIL). All are shore-based facilities located on the country’s west coast. Government-owned Indian Oil Corporation’s 5mta Ennore LNG terminal started operations in 2019 and is the first LNG terminal on the Eastern coast of India. India commissioned its sixth LNG import terminal at Mundra in Gujarat in 2020. India’s plan to double the share of natural gas in its energy mix to 15 percent by 2030 will require a huge increase in imports and the construction of more LNG terminals. Four additional terminals Jaigarh, Dhamra, Jaffrabad and Chhara are expected to come online by 2023.
Recent Market Trends
India is the world’s third-largest energy consumer and energy demand is expected to double to 1,123 million tons of oil equivalent (Mtoe) by 2040.
As India increasingly relies on imported LNG, the country is now the fourth largest LNG importer. The country has gradually increased its LNG imports due to a decline in domestic natural gas production. India imported 26.65 million tons of LNG in 2020, as compared to 23.9 million tons in 2019.
India currently has LNG regasification capacity of around 42.5 million metric tons/year, and it plans to reach 70 million metric tons/year import capacity by 2030 and 100 million metric tons/year by 2040.
The U.S. share of Indian LNG imports is approximately eight percent of total LNG imports. In 2020, the United States exported 124.4 million cubic feet of LNG to India, valued at over $834 million according to data released by the U.S. Department of Energy and U.S. Census Bureau.
India is the second largest refiner in Asia, with an oil refining capacity of 246.90 million metric tons. Private companies accounted for about 37% of the total refining capacity in 2021.
Competitive Landscape
Government-owned Oil and Natural Gas Corporation (ONGC) dominates the upstream segment, accounting for approximately 70% of the country’s total oil and gas output. Another government-owned company, Oil India Limited (OIL), and private companies Cairn India and Reliance Industries Limited are also major oil and gas producers in the country. Domestic production cannot keep pace with the steeply growing consumption of both oil and gas, and dependence on imports is increasing. Other key players include GAIL (India) Limited, Gujarat State Petroleum Corporation Ltd., Hindustan Oil Exploration Company Ltd., Joshi Oil and Gas, Adani Welspun Exploration Limited Shell, and Essar Oil and Gas Exploration and Production Limited.
India has a network of 10,419 km of crude pipeline having a capacity of 147.9 million metric tons per annum (mmtpa). In terms of length, Indian Oil Corporation (IOCL) accounts for 50.88% (5,301 km) of India’s crude pipeline network. In terms of actual capacities, ONGC leads the pack with a share of 40.97%, followed by IOCL at 32.86%. The latter also leads the refined products pipeline with 50.91% of total 9400 km of pipeline, while GAIL has the largest share (57.56% or 18,334 km) of the country’s natural gas pipeline network (32,718 km).
In the downstream segment, India has 18 government owned refineries, three private refineries, and two are joint ventures between government and private companies. IOCL is the largest company controlling 28.23% of the total refining capacity of 246.90 million metric tons. Reliance Industries Limited - India’s largest private refiner, with the world’s largest refining complex at Jamnagar - controls about 27.62% of the total refining capacity share followed by Bharat Petroleum Corporation Limited (BPCL) at 14.30%. The other key refinery players include Hindustan Petroleum Corporation Limited (HPCL), Nayara Energy, ONGC, and few joint venture players. The Abu Dhabi National Oil Company, Saudi Aramco, HPCL, BPCL, and IOCL have signed a $44 billion strategic partnership agreement to jointly develop and build a new refinery on India’s west coast.
Petronet, Gas Authority of India Ltd. (GAIL), and the Gujarat State Petroleum Corporation are India’s key LNG players, concluding long-term sale and purchase agreements (SPAs) with overseas suppliers. However, the government-owned oil refiners – IOCL, BPCL and HPCL – have positioned themselves for greater involvement in the LNG sector.
Best Prospects
India is reasonably well endowed with conventional and unconventional gas resources, but the country is grossly under-explored and has strong potential for new discoveries. There are also significant opportunities in the unconventional domain, such as Coalbed Methane (CBM) and shale gas, which are still in the nascent stages of evaluation, exploration, and exploitation. The government-owned companies and large private companies are also exploring the “greening” of their businesses and are seeking carbon capture utilization and storage solutions and green hydrogen technology. There is also an urgent need to explore and adopt innovative solutions to create and add value from the existing assets, improve process and energy efficiency, yield optimization, and process integration.
Government owned downstream refiners have been allowed to formulate and implement their own crude import policies. This provides flexibility in sourcing and securing cheaper oil cargoes from the global oil market. IOCL, HPCL, and BPCL have imported small parcels of U.S. crude to diversify their import basket and reduce their dependence on the Middle East crudes. Refiners in India have plans to raise their capacity by 77% to about 8.8 million barrels per day by 2030 to meet the country’s rising fuel demand.
Government-owned energy refiners have announced plans to invest $27 billion by 2025 to increase refining capacity by 20% in India. With increase in refining capacities, management of environment degradation and refining waste is another area for collaboration that will compel the hydrocarbon sector to think of a shift from fossil to non-fossil sources.
There are also growing opportunities in various information technology (IT) solutions for improving cost effectiveness and productivity in city gas distribution. City gas distribution companies use IT solutions like supervisory control and data acquisition, satellite surveillance systems, and remote sensors for monitoring the gas transmission pipeline network.
India is one of the few countries to have announced its national hydrogen plans. The GOI is aiming for energy self-reliance by 2047and expects hydrogen to play a key role in helping India achieve this goal. Indian hydrogen demand is around 6.9 million tons per year, with around 53% consumed by refineries and 44% used by fertilizer plants to produce ammonia. The Indian government intends to double hydrogen consumption to 12 million tons per year by 2030 and increase it to 28 million tons per year by 2050, with refiners and fertilizer plants remaining the main consumers. According to the draft policy of India’s ministry of new and renewable energy, government-run fertilizer producers and oil refiners would be required to use some green hydrogen in their operations, from April 2023 for seven years. This provides opportunities for U.S. suppliers providing green hydrogen technology, electrolyzers, transportation technology, and other alternative clean energy solutions.
In India, carbon capture, storage, and utilization (CCUS) did not initially receive the attention it deserved due to high costs, limited research and development on techno-economic feasibility, and insufficient policy support. Leading industry players and government owned companies are now recognizing the importance of achieving carbon neutrality and are spearheading the promotion of CCUS in India. This provides opportunities for pilot projects in CO2 sequestration, exploring CO2-based Enhanced Oil Recovery (EOR), and scalability of CCUS in the steel sector.
Market Entry
The Indian government permits 100% of foreign direct investment (FDI) for exploration and production (E&P) of oil and natural gas fields, marketing infrastructure, marketing, pipelines, re-gasification infrastructure for liquefied natural gas (LNG), and for private sector refining through the automatic route with no need for prior approval of either the GOI or the Reserve Bank of India. Foreign investment in government-owned companies undertaking petroleum refining is capped at 49% and government approval is required.
Regulations / Registration Process
Government owned companies dominate the Indian exploration and production sector in oil and gas. Government owned ONGC accounts for the highest market share followed by OIL. Combined, both companies account for over 70 percent of the total market. The remaining market is divided among various private players. Government owned-companies source products and services through a bidding process which can be cumbersome. It is advisable to work with a local Indian partner who can manage the bidding process; however, the Indian company may look to their American partners for financial support to participate in these tenders. Vendors must register with these companies and be a part of the approved vendor list before they can bid on contracts.
Technical Barriers & Tariffs
The GOI has been proactive in developing the energy sector in India. However, problems with basic infrastructure - roads, railroads, ports, airports, education and training, power grids, and telecommunications - are significant obstacles, as India strives to achieve its full economic potential. U.S. exporters and investors face non-transparent and often unpredictable regulatory and tariff regimes. India’s 28 states and 8 union territories with varying business and economic conditions can pose a huge challenge for U.S. companies. U.S. firms should factor these state variations into their national business strategies. Additionally, local content requirements, the high cost of equipment, high rates of import duties, and the involvement with multiple government agencies coupled with the risks associated with the oil and gas business are some of the barriers that U.S. companies need to be aware of before entering the Indian market.
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Upcoming Trade Events:
Petrotech , New Delhi-NCR, India
Local Industry Resources:
U.S. Commercial Service Information:
Name: Sanjay Arya sanjay.arya@trade.gov
Name: Renie Subinrenie.subin@trade.gov
