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Thursday, May 5, 2011

Oil and Natural Gas sector of India- Demand & Production mismatch

Due to higher economic growth rate over 8% and very high population which is about 15% of the world population, India is the fourth larger consumer of oil in the world after USA, China  & Japan.

Oil demand is increasing due to burgeoning vehicle sales in India.
Oil accounts for the 24 % of total energy consumption in India, while natural gas demand is just 6%.

India produced approximately 8, 80, 000 barrels per day of total oil in the year 2009 while consumption was 30, 00, 00 barrels per day.
The gap between demand and production is widening day by day.

This widening gap between demand and production has made India, the sixth largest importer of the crude, with imports around of 21, 00, 000 barrels per day that is 70% of India’s oil demand.

US EIA (Energy Information Administration) expects India to be the fourth largest oil importer in the world by 2025, behind the USA, China & Japan.

Sector Organization

Upstream Sector

Major Upstream companies (companies which do the exploration and production of  the crude oil) in India are ONGC (Oil and Natural Gas corporation of India), OIL (Oil India Limited),IOL (Indian Oil Limited) & GAIL (Gas Authority of India Ltd),all  are state-run companies.
Private players are Reliance Industries, Cairn India Limited and BG Exploration.

Downstream Sector

Major downstream companies (companies which do the refining of the crude) are mainly state-run companies like IOC, HPCL and BPCL.
Private players are Reliance and Essar oil.

Crude reserves

In India most of the crude resources are located offshore, in the west of the country in Arabian Sea and in the Bay of Bengal which is in the east of the country.
Onshore reserves are in Rajasthan and the North East states.

Natural Gas 

India had approximately 38 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2010. The EIA estimates that India produced approximately 1.4 Tcf of natural gas in 2009.
 The bulk of India's natural gas production comes from the offshore regions, especially the Mumbai High complex and Krishna-Godavari (KG) fields in the Bay of Bengal.
 The onshore fields in Assam, Andhra Pradesh, and Gujarat states are also significant sources of natural gas production.

In 2009, India consumed roughly 1.8 Tcf (trillion cubic feet) of natural gas.  Natural gas demand is expected to grow considerably, largely driven by demand in the power sector. The power and fertilizer sectors account for nearly three-quarters of natural gas consumption in India.

Despite the steady increase in India's natural gas production, demand has outstripped supply and the country has been a net importer of natural gas since 2004. India's net imports reached an estimated 445 tcf in 2009.


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