The oil and gas sector in India
is a critical component of the country’s economy, accounting for 15 percent of
the country’s gross domestic product (GDP).Economic growth is directly linked
with energy demand, and a conservative estimate of 7 per cent growth is
expected to double India’s per capita energy consumption from 560 kilograms of
oil equivalent (kgoe) in FY10 to 1,124 kilograms of oil equivalent (kgoe) by
FY32. As oil and gas is one of the main sources to meet the required demand for
energy in India, its demand is forecast to rise further. In 2011, natural gas
accounted for 10 per cent of the country’s total energy requirements, whereas
estimates suggest that this figure will reach 20 per cent by 2025, with oil and
gas together accounting for approximately 45 percent of the total demand.
Market reports estimate that this
growth is expected to take the size of the Indian gas market to that of the gas
market in Japan, the largest consumer of liquefied natural gas (LNG) in Asia,
by the end of 2015. Despite having significant reserves in India, the increase
in demand is expected to be primarily met through imports.
To cope up with the increasing
demand, the government has allowed 100 per cent FDI in the oil and gas sector,
enabling some large partnerships such as the US$ 7.2 billion deal between
British Petroleum (BP) and Reliance Industries. In order to further aid the
development of the sector, the government introduces legislations such as the
New Exploration Licensing Policy (NELP) to enable companies to bid for
exploration rights, and encourage private sector participation. The
participation of the private sector is expected to bring in monetary resources
and technological capabilities, especially in the field of deep sea exploration
while simultaneously reducing the dominance of PSUs in the country’s
competitive landscape.
Posted By:
Reema Kapoor
ICIS
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