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PETROLEUM AND NATURAL GAS

FDI In Petroleum & Natural Gas

The petroleum and natural gas sector is among the eight core industries in India and plays a major role in influencing decision making for all the other important sections of the economy. India’s economic growth is closely related to energy demand; therefore the need for oil and gas is projected to grow more, thereby making the sector quite conducive for investment.

India consumed 204.92 MMT petroleum products and 58.64 BCM natural gas. The import dependency of crude oil and LNG during 2018 was 82.59% and 45.89% respectively. During 2018, petroleum import bill was $ 112 bn, a growth of 27% over $ 88 bn during 2017 - 18, and 23.42% of total gross import of the nation.

100% FDI in petroleum and natural gas is allowed in exploration activities under automatic route.

49% FDI in petroleum sector is allowed in by the Public Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs under automatic route.

3.3 %

Gas consumption CARG(2015-16 to 2021-22)
2 %

Petroleum Product Comsumption CARG (2015-16 to 2021-22)
6.5 %

Petroleum Product Retail Outlet CARG (2015-16 to 2021-22)

1

Largest exporter of petroleum products in Asia
2

2nd largest refiner in Asia
3

3rd largest consumer of crude oil and petroleum products in the world

India is expected to be one of the largest contributors to non-OECD petroleum consumption growth globally. Oil imports rose sharply to $87.37 bn in 2017-18 from $70.72 bn in 2016-17
India retained its spot as the 3^rd largest consumer of oil in the world in 2017 with consumption of 4.69 mbpd of oil in 2017, compared to 4.56 mbpd in 2016
At present about 16,788 km natural gas pipeline is operational and about 14,239 km gas pipelines are under development
India has witnessed a steady increase in production as well as consumption of petroleum products over the years. The production of petroleum products stood at 231.9 MMT during 2015-16 to 262.3 MMT in 2017-18
India was the fourth-largest Liquefied Natural Gas (LNG) importer in 2017 after Japan, South Korea and China. LNG imports increased to 26.11 BCM in 2017-18 from 24.48 BCM in 2016-17

Strategic Petroleum Reserves Program
Higher demand for aspirational product and servicesIt envisions creation of additional crude oil reserves facilities in PPP mode
City Gas Distribution
Coverage area has gone up from 20% to 70%
Abundant raw material
Oil reserves equal 604 MMT and natural gas reserves equal 1.2 TCM
Favorable policies
HELP, CBM and OALP to promote investments
Government incentives
Early production royalty concession of 10%, 20% and 30% for Category I, II and III basins

Nov 29, 2019: Prime Minister Narendra Modi announced that India will invest $100 bn in the oil and gas infrastructure of the country by 2024
Oct 15, 2019: ExxonMobil signs MOU with Indian Oil Corporation to expand LNG initiatives in India
Aug 12, 2019: Saudi Aramco buys 20% stake in Reliance's flagship chemical and refining business (RIL) in a deal valued at $15 bn
May 2019: Foreign investors will have opportunities to invest in projects worth $300 bn in India, as the country looks to cut reliance on oil imports by 10% by 2022, according to Mr.Dharmendra Pradhan, Minister of Petroleum and Natural Gas, Government of India.
Apr 2019: UAE's ADNOC and Indian Oil Corporation have signed a long term sales agreement for ADNOC's high-quality base oil ADbase which will be used for manufacture of engine oils for the automotive sector.
Mar 2019: Brookfield is going to acquire Reliance Gas Transportation Infrastructure, now known as East West Pipeline (EWPL) for Rs.13,000 crore (USD $1.80 bn).
Sep 2018: Government of Gujarat selected Energy Infrastructure Limited (EIL), a subsidiary of the Netherlands-based Energy Infrastructure Butano (Asia) BV, to set up a Liquefied Petroleum Gas (LPG) terminal at Okha with an investment of Rs.700 crore (USD $104.42 mn).

$7 bn FDI in petroleum & natural gas during April 2000 – March 2019
1.7% Sector’s share in total FDI in Petroleum sector in south India and north India during April 2000 – March 2019
49% FDI in Indian petroleum sector is allowed under automatic route in Petroleum refining by PSU, without disinvestment of dilution of domestic equity in existing PSUs
100% FDI equity Inflows in Petroleum is allowed in exploration activities of oil and natural gas fields under the automatic route
100% FDI is allowed in infrastructure related to the marketing of petroleum products & natural gas under the automatic route