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Published:Monday, January 13, 2020 5:26 PM

YEAR-END REVIEW 2019: OIL AND GAS INDUSTRY

YEAR-END REVIEW 2019: OIL AND GAS INDUSTRY

2019 has been a dynamic year in terms of changes, growth and developments for the Indian petroleum sector. The oil and gas sector value chain which comprises upstream, midstream and downstream has witnessed major changes considering the policy reforms, sectorial and economic growth. Increasing pollution due to carbon emissions by the consumption of petroleum products has been a major concern for the industry and investors during the years. The government of India is mainly focusing on encouraging the utilization of environment-friendly fuel & reduce the oil import by 10% in the coming years. To achieve the target's government has taken many steps hence introduced several policies and reforms, developmental projects and huge investments to upgrade the oil and gas infrastructure of the country. The upstream main focus was on to increase domestic oil production. Mid-stream encompassed the expansion of crude oil & natural gas pipeline network and increased the capacity of LNG Terminals. Downstream involved up-gradation of refineries for BS-VI fuel and enhancement of bio-fuel production. 
 
Union Budget allocated to the Petroleum Industry 2019-20 
 

 

Investment in Public Companies (in crore)-2019-20

Exploration and Production: 49057.21crore


Refinery and Marketing Sector:39390.62 Crore
 
Petrochemical Sector: 3939.74 Crore

Engineering Sector: 1251.73 Crore
 
 
 
Economic Indicators: Oil & Gas Industry, 2019-20
 
Economic Indicators
FY 2017-18
FY 2018-19
FY 2019-20(Nov)
GDP
GDP
USD 2.71Trillion
USD 2.9 Trillion
USD 578.69 Billion(Q3)
Growth rate
6.8%
6.1%
4.7%
Import & Export (In value terms)
Total Import
USD 465.6 Billion
USD 514.1 Billion
USD 318.8 Billion
Total Oil & Gas Import
USD 109.5 Billion
USD 138.6 Billion
USD 87.5 Billion
Crude Oil Imports
USD 87.8 Billion
USD 111.9 Billion
USD 69.5 Billion
Petroleum products Imports
USD 13.6 Billion
USD 16.3 Billion
USD 11.3 Billion
LNG Imports
USD 8.1 Billion
USD 10.3 Billion
USD 6.3 Billion
Share of Oil & Gas Import in total Import
23.9%
26.9%
27.4%
Import Dependency
82.9%
83.8%
84.7%
Total Export
USD 303.5 Billion
USD 330.1 Billion
USD 211.9 Billion
Petroleum products exports
USD 34.9 Billion
USD 38.2 Billion
USD 24.9 Billion
Share of Oil & Gas Export in total Export
11.4%
11.5%
11.7%
Import & Export (In volume terms)
Crude Oil Imports
220.4 MMT
226.5 MMT
149.9 MMT
Petroleum products Imports
35.5 MMT
33.3 MMT
27.6 MMT
LNG Imports
27439 MMSCM
28740 MMSCM
21743 MMSCM
Petroleum products exports
66.8 MMT
61.1 MMT
43.6 MMT
Consumption
Consumption of petroleum products
206.2 MMT
213.2 MMT
142.0 MMT
Natural gas consumption
59,170 MMSCM
60,798 MMSCM
42,359 MMSCM


 
Upstream Sector
 
India’s domestic crude oil & gas production is decreasing year by year due to geological uncertainty because of reservoir challenges, predominantly off the east coast. No big discovery & growing number of ageing oil fields has led huge dependency on Import.
 
              Crude Oil production
                                                                                                        Natural Gas Production
Major Policy reforms
 
Policy Reforms in Exploration and Licensing Policy (2019): Government has approved the Policy reforms in exploration and licensing sector for enhancing domestic exploration and production of oil and gas. The objective of the Policy is to attract new investment in Exploration and Production (E&P) sector, intensification of exploration activities in previously unexplored areas and liberalizing the policy in producing basins. Major Reasons for the reforms are stationary/falling domestic production of oil & gas, rise in import dependence and decline in investment in E&P activities The policy reforms focus on four major areas - the increasing exploration activities in unexpected areas, incentivization of enhanced gas production, marketing and pricing freedom and enhancement of domestic production from existing nomination fields of ONGC and OIL. Additionally, it has been decided that measures to promote ease of doing business shall also be initiated.
 
Mid-stream Sector

Mid-stream sector includes the crude oil & natural gas pipelines and major terminals in India.
 
 

Major crude oil and product pipeline network
 
   

Downstream sector
 
 

 
Conclusion
 
Indian oil and gas sector one of the core industry playing a vital role in the economic growth of the country. The government of India introduced many new policies and reformed the existing one to achieve the set target for the year. For the upstream sector, the Government incentivized the Enhanced Recovery methods to increase domestic oil production. This policy will also help the government to reduce the target of 10% import by 2022. The midstream sector beheld huge growth as the oil & gas pipeline network and terminal capacity increased hastily to 16,981 KM & 33.6 MMTPA respectively in 2019. The government of India gas has planned a major investment of around USD 100bn to develop the oil and gas infrastructure which also includes the development of existing pipeline and terminals. The downstream sector has witnessed major policy changes due to alarming pollution levels in the major cities of the country. The government of India implemented BS-6 (effective by April 2020) skipping the BS-5 norms that led to the up-gradation of refineries to produce BS-6 fuel. The government continuous efforts towards biofuels are visible as the procurement of Biodiesel witnessed the growth of 46.89 % in FY 2018-19. Apart from this 5000 CBG plants will be set across the nation by 2023 where biogas will be extracted from agricultural waste, cattle dung & solid waste.
 
CGD business segment observed huge growth in 2019 owing to government initiatives & policy to increase the share of natural gas in the energy mix of India. Currently India owns 1,906 CNG stations with 35,17,652 total CNG vehicles and 57,10,239 Domestic, 29,253 Commercial, 9,846 Industrial PNG connections. In upstream sector EOR(enhanced oil recovery) & Downstream sector CGD & Biofuels are expected to showcase momentous growth in the coming years. 

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