PrintThe Indian economy continues to show impressive economic growth. The country’s real gross domestic product (GDP) grew at an impressive rate of 9.1 percent during the first half of fiscal 2006 (April – September 2006), after growing by 8.7 percent in fiscal 2005.
Together with the country’s impressive growth, India has also become a significant consumer of energy resources. According to EIA estimates, India was the fifth largest consumer of oil in the world during 2006.
Oil
India is a growing net importer of oil. According to Oil & Gas Journal (OGJ), India had 5.6 billion barrels of proven oil reserves as of January 2007, the second-largest amount in the Asia-Pacific region (behind China).
India’s crude oil reserves tend to be light and sweet, with specific gravity varying from 38° API in the offshore Mumbai (Bombay) High field to 32° API at other onshore basins. Much of India’s crude oil reserves are located off the western coast (Mumbai High) and in the northeast of the country, although substantial undeveloped reserves are located in the offshore Bay of Bengal and in Rajasthan state.
The combination of rising oil consumption and fairly stable production levels leaves India increasingly dependent on imports to meet consumption needs. In 2006, the country produced an average of 846,000 barrels per day (bbl/d) of total oil liquids, of which 77 percent, or 648,000 bbl/d, was crude oil.
During 2006, India consumed an estimated 2.63 million bbl/d of oil. EIA estimates that India registered oil demand growth of 100,000 bbl/d during 2006. EIA forecasts suggest the country will experience similar gains during 2007 and 2008.
Sector Organization
India’s oil sector is dominated by state-owned enterprises, although the government has taken steps in recent years to deregulate the hydrocarbons industry and encourage greater foreign involvement.
India’s state-owned Oil and Natural Gas Corporation (ONGC) is the largest oil company, and also the country’s largest company overall by market capitalization. ONGC is the dominant player in India’s upstream sector, accounting for roughly three-fourths of the country’s oil output during 2006, according to Indian government estimates.
As a net importer of oil, the Indian government has introduced policies aimed at increasing domestic oil production and oil exploration activities. As part of this effort, the Ministry of Petroleum and Natural Gas crafted the New Exploration License Policy (NELP) in 2000, which for the first time permits foreign companies to hold 100 percent equity ownership in oil and natural gas projects. However, to date, only a handful of oil fields are being operated by foreign firms.
India’s downstream sector is also dominated by state-owned entities, although private companies have increased their market share in recent years.
The Indian Oil Corporation (IOC) is the largest state-owned company in the downstream sector, operating 10 of India’s 17 refineries and controlling about three-quarters of the domestic oil transportation network. Reliance Industries, a private Indian firm, opened India’s first privately-owned refinery in 1999, and has gained a considerable market share in India’s oil sector.
Exploration and Production
The Indian government has held several licensing rounds under the NELP framework in an effort to promote E&P activities and boost domestic oil production. To help meet growing oil demand, India has promoted various exploration and production (E&P) projects over the last several years in an effort to boost domestic oil production.
The primary mechanism through which the Indian government has promoted new E&P projects has been the NELP framework.
Between 2000 and 2005, the government awarded 110 oil and natural gas concessions in five
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