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Introduction

The Indian Petroleum industry is one of the oldest in the world, with oil being struck at Makum near Margherita in Assam in 1867 nine years after Col. Drake's discovery in Titusville. References to rock-oil as 'shilajatu' are found in the Vedas. Early evidences of oil seeps were recorded along the banks of the Nampong river in upper Assam, in the 1820s by British army men and geologists. First Indian oil well at Digboi in 1889. Refining, transportation, followed with the discovery at Digboi. It is amazing how the oil was transported in elephant drawn carts across the jungles and then through the waterways to as far as the Malabar coast. Seismic surveys were carried out in the 19th century in jungles of Assam using elephant logistics.

After independence, India didn't lose much time in initiating geological and seismic surveys in search of oil in the Indian basins. After discoveries in the western sector in Gujarat, the prevailing attitude of non-cooperation by multinationals, necessitated the establishment of Koyali refinery in the 1960s. One after the other major refinieries were set up and infrastructure for distribution of the products expanded at a great pace.

Unique challenges of reaching essential fuel, be it kerosene or LPG to far-flung, logistically challenging terrains across the vast geography of India was addresssed with amazing resilience. India's forays into offshore in the 1970s at Aliabet were also very early for a fledgling industry of a developing country. The bold initiative taken with faith in indigenous capabilities in an entirely new and technologies challenging area is a tribute to the Indian oil technologists of the day. But the faith was not misplaced as the oilmen did the country proud by bringing the Mumbai high to production in a then world record time of 26 months from the day of discovery.

The years since independence have seen the rapid growth of the upstream and downstream oil sectors. The industry has come a long way since then. There has been optimal use of resources for exploration activities and increasing refining capacity as well as the creation of a vast marketing infrastructure and a pool of highly trained and skilled manpower. Indigenous crude production has risen to 37.862 MMT in 2012-13. Natural gas production has increased from 32.202 BCM in 2005-06 to 40.679 BCM in 2012-13, an installed domestic refining capacity of 215.066 Metric Million Tonne Per Annum (MMTPA) as on 01.04.2013 with twenty two refineries and a network of 38401 kms of crude oil, natural gas and product pipelines in India. 

The giant offshore structures, the ultramodern environment friendly refineries, the high-tech pipeline transportation facilities may appear dazzling. For nearly fifty years after independence, the oil sector in India, had seen the growth of giant national oil companies in a sheltered environment. A process of transition of the sector begun in the mid-nineties, from a state of complete protection to the phase of open competition. The move was inevitable if India had to attract funds and technology from abroad into our petroleum sector. With the consumption of hydrocarbons said to increase manifold in the coming decades, the liberalisation, deregulation and reforms in the petroleum sector is essential for the health and overall growth of India’s economy.

The sector in recent years has been characterized by rising consumption of oil products, declining crude production and low reserve accretion. India remains one of the least-explored countries in the world, with a well density among the lowest in the world. With demand for over 150 million tonne, India is the fourth largest oil consumption zone, even though on a per capita basis the consumption is a mere 0.6 measured in tonnes of oil equivalent per head, amongst the lowest in the world- this makes the prospects of the Indian Oil industry even more exciting.

'With more than a billion people, a structural demographic shift resulting in exploding consumption expenditure, full deregulation of a market growing at twice world averages, India represents one of the most exciting oil markets in the world' - CLSA Asia Pacific.

Demand and Supply

During FY 2013–14, the total consumption of petroleum products in India was 158.2 million tonnes (MT). The consumption stood at 14.2 MT in March 2014, according to data released by the Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas. The transport (38%), residential (26%) and industrial (24%) sectors are the largest consumers of petroleum products. India had total reserves of 1354.76 billion cubic metres (BCM) of natural gas and 758.27 million metric tonnes (MMT) of crude oil at the end of FY 2012–13. The production of petroleum products is estimated to rise to 216 MMT in 2012-13.

The share of fuels in India's exports surged from 5.59 per cent in 2003–04 to 20.05 per cent during 2013–14. Total exports of fuel products stood at US$ 62.69 billion in value terms during FY 2013–14.

"Developing economies like India with low per capita energy consumption are bound to need higher energy for growth. The entire Asia Pacific region, besides Africa will need tremendous amount of energy for growth and development," according to the Indian Oil Secretary, adding that the diminishing availability of crude oil and its high prices were a matter of "deep concern". With 17% of the world's population, India's share of world's total energy consumption is a little over 4%. "Oil consumption in India is slated to grow by over 4% during the next 10-15 years as compared to the global oil demand of only about 0.8%," he said.

India's self- sufficiency in petroleum products

India's self- sufficiency in petroleum products has declined to less than 25% from 34% in 1997-98 and from 60% in 1985-86 resulting in a substantial growth in the import bill.  India has achieved self-sufficiency in refining with the present refining capacity.

However, India is aiming to achieve energy self-sufficiency by 2030 and also aims for complete end to oil imports that same year. The claim was made by the then Union Minister for Petroleum and Natural Gas- M. Veerappa Moily in 2013, who said India’s self-sufficient energy sector will also see the government working towards reducing gas and oil imports. Moily noted that the import bill for petroleum products was US$160 billion but could fall by 50% in 2020, 75% in 2025 and be completely halted in 2030. By 2017, India will receive natural gas from Turkmenistan through the Turkmenistan-Afghanistan-Pakistan-India pipeline.


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