The oil and gas industry has been instrumental in fuelling the rapid growth of the Indian economy. The petroleum and natural gas sector which includes transportation, refining and marketing of petroleum products and gas constitutes over 15 per cent of the GDP.

Petroleum exports have also emerged as the single largest foreign exchange earner, accounting for 17.24 per cent of the total exports in 2007-08. Growth continued in 2008-09 with the export of petroleum products touching US$ 23.63 billion during April-December 2008.

In November 2008, the Cabinet Committee on Economic Affairs awarded 44 oil and gas exploration blocks under the seventh round of auction of the New Exploration Licensing Policy (NELP-VII). With NELP VIII, the overall number of blocks brought under exploration exceeded 200.

The allocation brought in investments worth US$ 1.5 billion. The eighth round of auction which ended on October 12, 2009 attracted over US$1.34 billion in minimum investment.

Production

• Refinery production in terms of crude throughput increased to 160.77 MT in 2008-09 as compared to 156.10 MT in 2007-08.
• The production of natural gas went up to 32.84 billion cubic metres tonnes (BCM) in 2008-09, from 32.40 BCM in 2007-08.
• The projected production of crude oil during the 11th Five-Year Plan (2007-2012) is 206.76 MMT, while that of natural gas is 255.27 BCM.
• Cumulative production of crude oil between April-December 2009, was 25,152 MT, while cumulative production of refinery production during the same period was 119,283 MT. Natural gas production during the same period was 33,846 million cubic metres.
• State-run Indian Oil Corporation Ltd will raise the capacity of its Haldia refinery by 25 per cent to 7.5 million tonnes by end February 2010. It will also expand its 12 million tonnes a year Panipat refinery to 15 million tonnes by August, 2010.

Consumption

India's domestic demand for oil and gas is on the rise. As per the Ministry of Petroleum, demand for oil and gas is likely to increase from 186.54 million tonnes of oil equivalent (mmtoe) in 2009-10 to 233.58 mmtoe in 2011-12.

India's domestic oil product sales in November 2009 grew 3.7 per cent from a year ago, driven by higher demand for auto fuels, according to government data. Oil product sales were 11.32 million tonnes in November, as per official data.

Global Refining Hub

India is emerging as the global hub for oil refining with capital costs lower by 25 to 50 per cent over other Asian countries.

Already, the fifth largest country in the world in terms of refining capacity, with a share of 3 per cent of the global capacity, India is likely to boost its refining capacity by 45 per cent or 65.3 mtpa (million tonne per annum) over the next five years, according to a Deutsche Bank report. Indian companies plan to increase their refining capacity to 242 mtpa by 2011-12 from about 149 mtpa in 2007.

Retail Sector

Increase in automobile sales has led to significant investments being made to develop and expand the petroleum retail market. According to US-based consultancy Keystone, automobile sales are likely to grow to about 20 million a year by 2030 (from the present 1 million), making India the third largest automobile market in the world.

Consequently, state-run fuel retailers Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation together are planning to open 2,263 new petrol pumps in the country during the fiscal year 2010, over an above the 35,068 pumps they already own.