The Indian oil and gas market is expected to record a CAGR of over 2.64% during the forecast period, 2020 – 2025. Factors, such as increasing natural gas pipeline capacity, increasing refining capacity, and increasing demand for petroleum products, are expected to increase the growth for the Indian oil and gas market during the forecast period. However, a huge dependence over imports of crude oil and natural gas for satisfying domestic demand and high volatility of crude oil prices is expected to restraint the growth of the Indian oil and gas market.
- The refining capacity has been growing considerably over the recent past is expected to grow over the forecast period, owing to the expansion projects of several refineries and a possibility of one of the largest greenfield refineries getting constructed in India. Therefore, the downstream sector is expected to witness growth.
- There have been significant gas hydrates discoveries in the KG Basin. Economically feasible extraction of the gas hydrates may become an opportunity for the companies and may lead to a boom in natural gas production
- Increase in investment especially in midstream sector is expected to witness growth. The pipeline market in the country has grown significantly with pipeline increasing in all the sectors. Total pipeline length at 43807 km, in 2018, registered a growth of 3% as against 42541 km, in 2017.
Key Market Trends
Downstream Sector to Witness Significant Growth
- The refinery capacity of the country increased, by 3.65 %, Year-on-Year, to 4,972 thousand barrels per day (kbpd), in 2018, from 4307 kbpd, in 2015. The refining throughput increased from 2.9% to 5154 kbpd, in 2018, from 5010 kbpd, in 2017.
- In 2018, new refineries were set to be established in various parts of the country like the Barmer refinery and petrochemical complex being built in Rajasthan, India, and is expected to start refining activities by 2022.
- In 2019, a multi-company deal for a refinery in Maharashtra was signed between Saudi Aramco, HPCL, BPCL, and ADNOC touted as the world's largest greenfield refinery when it is fully completed. The deal is expected to be around USD 70 billion, according to the offer presented by the government of India to the respected companies.
- Owing to several major upcoming projects for capacity expansion and capacity addition, the downstream sector is expected to witness significant growth owing to upcoming projects of expansion and construction of new refineries.
Increase in Investment to Drive the Market
- In 2019, The world's longest liquified petroleum gas (LPG) pipeline is expected to be laid, in the forecast period, for approximately 9,000 crore INR. It is expected to take the LPG from three LPG import terminals (at Kandla, Pipavav, and Dahej ) and two oil refineries along the route. The LPG will be transported to the LPG bottling plants in the States of Gujarat, Madhya Pradesh, and Uttar Pradesh.
- The pipeline is the most economical way of transportation of natural gas, crude oil, and petroleum product over a long distance. Pipeline length has increased to 43807 km, 2018 from 40560 km, in 2015.
- The capacity of crude oil pipeline increased to 158,911 thousand metric tons (TMT), in 2018, from 145,693 TMT, in 2017. One of the largest capacity crude oil pipelines in the country is the Salaya – Mathura pipeline, which has an existing capacity of 25000 TMT in 2018.
- Hence, investment in the oil and gas sector has been driving the Indian oil and gas market. Pipeline coverage is expected to increase substantially in the forecast period with petroleum product pipeline is expected to increase in the most in the segment.
The Indian oil and gas market is moderately consolidated. The major players are Oil and Natural Gas Corporation, Oil India Limited, Reliance Industries, Indian Oil Corporation Limited, and Punj Lloyd Limited.
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