India’s Petroleum Industry
Introduction
India’s petroleum industry spans the exploration, production, refining, distribution, and marketing of petroleum and its by-products. It covers upstream activities like crude oil and natural gas extraction, midstream operations such as transportation and storage, and downstream processes including refining and distributing fuels like petrol, diesel, LPG, and kerosene. This industry ensures India’s energy security and drives economic activities.
India operates 19 Public-Sector Undertaking (PSU) refineries, 3 private-sector refineries, and 1 joint-venture refinery. The nation’s refining capacity rose from 215.066 MMTPA in April 2014 to 256.816 MMTPA in April 2024, showcasing consistent growth in its energy infrastructure.
Origin and Brief History
India’s petroleum industry began in 1867 with the first oil well in Digboi, Assam, marking the start of exploration and production activities. The Indian Oil Corporation’s establishment in 1959 introduced a structured approach to refining and distribution. Over the years, the industry expanded from small-scale refineries to a robust network catering to domestic and export demands. Today, the petroleum sector exemplifies resilience and innovation, adapting to global and domestic energy challenges.
Industry Growth and Evolution
Technological advancements and policy reforms have driven the sector’s evolution. The 1990s economic liberalization spurred private and foreign investments. Public sector undertakings (PSUs) like ONGC and Indian Oil Corporation have been instrumental in exploration and refining. Establishing state-of-the-art facilities like the Jamnar Refinery in Gujarat has boosted refining capacity, positioning India as a refining hub in Asia. Initiatives such as the National Exploration Licensing Policy (NELP) have further incentivized exploration.
India’s energy reserves are promising, with 651.8 million metric tons of recoverable crude oil and 1,138.6 billion cubic meters of recoverable natural gas in its sedimentary basins, underscoring its evolving energy landscape.
Here are some recent updates in India’s petroleum industry:
- India is on track to increase its exploration acreage to 1 million square kilometers by 2030, with a 16% increase expected in 2025.
- The price of a domestic LPG cylinder in India is among the lowest worldwide, with costs as low as Rs. 803 per 14.2 Kg cylinder. For PMUY households, after a targeted subsidy of Rs 300 per cylinder, the effective price is Rs 503/per cylinder.
- The approval process for exploration and production activities in the petroleum industry has now been simplified, reducing 37 approval processes to just 18, of which nine are now available for self-certification.
- Introducing the Oilfields (Regulation and Development) Amendment Bill in 2024 ensures policy stability for oil and gas producers, and enables a single license for all hydrocarbons. This bill was recently passed by the Rajya Sabha on December 3, 2024.
Foreign trade of Petroleum
India has experienced a significant rise in petroleum product exports over the past decade, driven by its refining capacity of over 250 MMTPA. Key export destinations include South Asia, Africa, and Europe. The government’s focus on export-oriented growth and the development of Special Economic Zones (SEZs) for refineries have further fueled this trend. These exports not only strengthen foreign exchange reserves but also elevate India’s role as a global energy supplier.
Contribution to GDP
According to the Ministry of Statistics and Programme Implementation, the Gross Value Addition (GVA) of Coke and Refined Petroleum Products rose from ₹1.56 lakh crore in 2012-13 to ₹2.12 lakh crore in 2022-23. During this period, India’s GDP grew from ₹99.44 lakh crore to ₹269.49 lakh crore at current prices.
The petroleum sector provides millions of direct and indirect jobs across exploration, refining, distribution, and retail. Its value chain also supports ancillary industries like petrochemicals, logistics, and manufacturing, boosting socio-economic stability through skill development and diverse career opportunities.
Global Ranking in Refining and Supply
India ranks among the top five refining nations globally, thanks to its robust infrastructure and strategic geographic location. The country is the seventh-largest exporter of refined petroleum products. Facilities like the Jamnagar refinery, one of the world’s largest, underscore India’s dominance in the refining sector. This global standing enhances India’s energy security and positions it as a key player in international energy markets. International Energy Agency (IEA) in February 2024 assessed that India will become the largest source of global oil demand growth between now and 2030. India is the second-largest economy in biofuel blending, following Brazil.
| Metric | India’s Global Rank |
| Exporter of Refined Products | 7th |
| Ethanol Blending in Petrol | 2nd |
| BioFuel Producer | 3rd |
| LNG Terminal Capacity | 4th |
| Refining Capacity (MMTPA) | 4th |
Technological Advancements in the Petroleum Industry
Adopting cutting-edge technologies has been pivotal to the petroleum industry’s growth. Enhanced Oil Recovery (EOR) techniques, digitalization, and the use of artificial intelligence (AI) have optimized exploration and production processes. Refineries are increasingly adopting green technologies to minimize environmental impact. Projects such as bio-refineries and the development of alternative fuels like compressed bio-gas (CBG) showcase the industry’s commitment to sustainability and innovation.
Government Initiatives
The Indian government has launched several initiatives to bolster the petroleum sector. Here are some key schemes:
- Pradhan Mantri JI-VAN Yojana: Supporting bio-ethanol projects such as second-generation and third-generation plants for sustainable fuel production.
- Strategic Petroleum Reserves: Enhancing energy security through storage facilities. In India, the SPR is primarily located at three underground storage facilities in Visakhapatnam, Mangalore, and Padur (Karnataka), with a total capacity of 5.33 Million Metric Tonnes (MMT) of crude oil managed by the Indian Strategic Petroleum Reserve Limited (ISPRL).
- Ethanol Blending Program: Promoting biofuels to reduce dependence on fossil fuels and curb emissions. The government has a target of achieving 20% ethanol blending in petrol by 2025-26. Since the inception of the EBP Programme, ethanol blending has increased from 38 crore liters in the Ethanol Supply Year (ESY) 2013-14 to over 707.4 crore liters in ESY 2023-24.
- City Gas Distribution Network Expansion: Expanding piped natural gas (PNG) and compressed natural gas (CNG) infrastructure by covering 733 districts in 34 states/UTs covering almost 100% of the mainland area and almost 100% of the total geographical area of the country.
- Energy Security Initiatives: Investing in overseas exploration and acquisition of oil blocks.
Moving towards Greener Fuels
- SATAT Initiative (Sustainable Alternative Towards Affordable Transportation): The SATAT initiative invites potential investors to set up Compressed Biogas (CBG) production plants. The aim is to make better use of agricultural residue, cattle dung, and municipal solid waste, and provide farmers with an additional source of revenue.
- Mission Green Hydrogen: Promoting green hydrogen production to reduce carbon footprint. According to the Ministry of New and Renewable Energy, global demand of over 100 MMT of Green Hydrogen and its derivatives like Green Ammonia is expected to emerge by 2030. Aiming at about 10% of the global market, India can potentially export about 10 MMT of Green Hydrogen/Green Ammonia per annum. The production capacity targeted by 2030 is likely to leverage over ₹8 lakh crore in total investments and create over 6 lakh jobs. Nearly 50 MMT per annum of CO2 emissions are expected to be averted as a result of the various Green Hydrogen initiatives under the Mission. Achievement of Mission targets is expected to contribute to India’s energy security and reduce a cumulative ₹1 lakh crore worth of fossil fuel imports by 2030.
- National Bio-Energy Programme: Focused on bio-energy production and reducing waste.
- Hydrocarbon Exploration and Licensing Policy (HELP): Encouraging private investment in exploration and production.
Implications for India’s Growth and Development
The petroleum industry’s growth drives GDP, foreign exchange earnings, and industrial expansion. Politically, energy independence enhances India’s global influence and reduces strategic risks. Socially, it fosters rural development through improved energy access and job creation.
Future Outlook
India’s petroleum industry is evolving in response to global energy transitions and rising domestic demand. Increased investments in exploration, refining expansion, and renewable energy adoption will shape its future. Initiatives like green hydrogen production and carbon capture technologies showcase its adaptability. By focusing on sustainability and energy efficiency, India aims to retain its global energy leadership while meeting climate goals.
| Key Area | Future Target |
| Refining Capacity | 309.5 MMTPA by 2030 |
| Ethanol Blending | 20% by 2025-26 |
| Green Hydrogen Production | 5 MMTPA by 2030 |
| Exploration Acreage | 1 million sq. kms. by 2030 |
References
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