India Set to Tap Vast Oil Reserves With Multi-Billion Dollar Investments
Amid concerns over U.S. President Donald Trump’s hard-hitting tariff policy, diversified Indian financial services company Motilal Oswal has suggested that India could strengthen its domestic industries and ramp up local production. Trump has a history of imposing heavy tariffs on India, including 25% on steel and 10% on aluminum imposed in 2018. The tariffs had an inimical effect on India’s trade with the U.S., with steel exports plunging 46% one year after the tariffs were announced. Meanwhile, India’s heavy reliance on oil imports leads to huge capital outflows and a weaker rupee. India imports 87% of its oil, mainly from Russia, Iraq, Saudi Arabia, the United Arab Emirates and the U.S. India spent $132.4 billion on crude oil imports in the 12 months up to mid-2024, a 16% Y/Y drop thanks to lower oil prices. Luckily, India is well endowed with substantial oil reserves. Last year, S&P Global Commodity Insights reported that four largely unexplored sedimentary basins in India could hold up to 22 billion barrels of oil. In effect, lesser-known Category-II and III basins namely Mahanadi, Andaman Sea, Bengal, and Kerala-Konkan contain more oil than the Permian Basin which has already produced 14 billion of its 34 billion barrels of recoverable oil reserves. Rahul Chauhan, an upstream analyst at Commodity Insights, has emphasized the potential of India’s unexplored Oil & Gas sector, “ONGC and Oil India hold acreages in the Andaman waters under the Open Acreage Licensing Program (OALP) and have planned a few significant projects. However, India still awaits the entry of an international oil company with deepwater and ultra-deepwater exploration expertise to participate in current and upcoming OALP bidding rounds and explore these frontier regions,” he has declared. Currently, only 10% of India’s 3.36 million sq km wide sedimentary basin is under exploration. However, Petroleum Minister Hardeep Singh Puri says that figure will jump to 16% in 2024 following the award of blocks under the Open Acreage Licensing Policy (OALP) rounds. So far, OALP has resulted in the award of 144 blocks covering about 244,007 sq km. Under OALP, India allows upstream exploration companies to carve out areas for oil and gas exploration and put in an expression of interest for any area throughout the year. The interests are accumulated thrice a year following which they are put on auction. According to Puri, India’s Exploration and Production (E&P) activities in the oil and gas sector offer investment opportunities worth $100 billion by 2030. ndia boasts significant discoveries in the Krishna-Godavari, Barmer, and Assam basins, but exploration in other areas has been slower to develop. Of India’s 3.14 million square kilometers of sedimentary basins, 1.3 million sq km are in deep waters. India had its first foray into deepwater exploration in the Bay of Bengal in 2024 in the Krishna-Godavari Basin, courtesy of India’s state run Oil and Natural Gas Corporation (ONGC). ONGC said it was planning to spend over $10 billion developing multiple deepwater projects in its KG-DWN-98/2 block in that basin. Meanwhile, state-owned upstream company Oil India Ltd is looking to start exploration activities in Nagaland “We have a total of 30 blocks under the OALP. We have already drilled all wells under the awarded OALP blocks, except in Nagaland. We are pursuing the ministry and they have set up a high power committee involving OIL, ONGC, government officials, to discuss the issue with the Government of Nagaland and resume exploration,” the official said. Unlike Pakistan, India is likely to have little trouble attracting the oil and gas majors. Indeed, British energy giant BP Plc (NYSE:BP) has been hunting for more opportunities in the country. BP has forged a joint venture with Indian multinational conglomerate Reliance Industries to operate 1,900 fuel retail stations across India and produces oil and gas from a deepwater block in the Krishna-Godavari basin. The JV has teamed up with ONGC to bid for exploration rights for an offshore block in India. Analysts have predicted that India is set to become the key driver of global oil demand growth, overtaking China. “China’s role as a global oil demand growth engine is fading fast,” Emma Richards, senior analyst at London-based Fitch Solutions Ltd, told The Times of India. According to the analyst, over the next decade, China’s share of emerging market oil demand growth will decline from nearly 50% to just 15% while India’s share will double to 24%. A rapidly growing population, which has likely surpassed China’s, is expected to be the main driver of consumption trends in India. Meanwhile, the country’s transition from traditional gasoline and diesel-fueled transport is expected to lag other regions, in sharp contrast to China’s skyrocketing adoption of electric vehicles and clean energy in general.
India’s spot oil needs wane as Russia flows are set to rebound
Indian refiners are likely to issue fewer tenders for spot crude in the coming months as volumes from top supplier Russia return to near normal levels, highlighting the trade’s success in working around US sanctions. The Asian nation’s state-owned processors are on track to secure more than three dozen cargoes that will load next month, according to people familiar with the matter. Combined with deliveries for private refiners Reliance Industries Ltd. and Nayara Energy Ltd., there may be more than 60 shipments of discounted Russian crude in April, or almost 52 million barrels, the people said, declining to be identified as the transactions aren’t public. Flows between the nations had slipped in recent months as a transition period for tighter US sanctions on shipments from Russia came to an end, forcing the state-owned refiners to issue a slew of spot tenders that saw them buy more expensive oil from alternative producers. Traders have now lined up enough “clean” Russian cargoes — meaning shipments untouched by any US-sanctioned entity — for April to help the companies meet most of their spot demand and ease concerns over future supplies, the people said. Most of the cargoes were booked at a discount of less than $3 a barrel to benchmarks, the people said. Discounts had collapsed to as little as $1 a barrel earlier this year, as sanctions pushed freight rates higher for Russia shipments. Russia’s monthly crude exports to India have fallen to 1.6 million barrels a day this year, down from an average of 1.8 million in 2024, according to data from Kpler. The move comes amid buyers’ broader optimism over supplies from Russia. European officials last week said the Trump administration has pared back its engagement with efforts to enforce sanctions as the US pushes for an end to the war in Ukraine.
Kochi launches trial run of biogas plant to convert 150 tonnes of food waste to gas
The city of Kochi has initiated a trial run for its newly constructed compressed biogas (CBG) plant in Brahmapuram, aimed at converting 150 tonnes of food waste into gas. The first phase of the plant, which includes one of the two bio-digesters, is now operational, with the second bio-digester expected to be completed soon. BPCL was given10 acres of land belonging to the Kochi Municipality free of cost for the construction of the plant. This land is adjacent to the land acquired by BPCL from Fertilisers and Chemicals Travancore (FACT). The necessary construction permits were swiftly secured through a single-window clearance process. The project, announced in November 2023, began construction in March 2024. Although the construction was planned to take 18 months, it was finished six months earlier than expected, with a total cost of approximately ₹800 million.
Himanta Biswa Sarma flags Rs 5 billion annual loss at BCPL, vows revival plan
Assam Chief Minister Himanta Biswa Sarma has raised concerns over the financial health of Brahmaputra Cracker and Polymer Limited (BCPL) in Lepetkata, Dibrugarh, revealing that the company has been incurring an annual loss of approximately Rs 5 billion for the past two years. During his visit to BCPL, CM Sarma highlighted the critical financial challenges faced by the organization, citing its heavy dependence on bank loans, which has put the project in a difficult position. “The road ahead for BCPL is challenging because this organization has been making a loss of around ₹5 billion annually for the last two years. They are heavily dependent on bank loans, which puts the project in a tough spot. If they continue borrowing from banks, they will face major problems in the days to come,” CM Sarma stated. Despite the financial distress, CM Sarma assured that efforts are underway to resolve the crisis. He emphasized the collective responsibility of stakeholders, including Oil India Limited (OIL), Numaligarh Refinery Limited (NRL), the Assam government, and the Gas Authority of India Limited (GAIL), which holds a 70% stake in BCPL. “Assam Government, OIL, and NRL hold a 30% stake in BCPL, while GAIL has the remaining 70%. Together, we are working on a solution to pull the company out of this financial crisis,” he added.
Big Oil Shrugs at $50 Crude
Exxon is planning to boost its oil production regardless of where international oil prices are heading. This comes from a senior company executive who spoke to Semafor this week. It also likely reflects the sentiment across the supermajor segment of the energy industry. After all, that’s what the consolidation drive was all about. Exxon announced its plan to take over one of the biggest operators in the shale patch, Pioneer Natural Resources, in late 2023. The value of the deal was calculated at $59.5 billion. At the time, Exxon said the deal would result in combined resources of an impressive 16 billion barrels of oil equivalent in the Permian—and that it had every intention to exploit these resources. From 1.3 million barrels of oil equivalent daily in 2023, the supermajor saw its Permian output in 2030 reaching 2 million barrels daily. Prices were not mentioned as a factor in production decisions at all. Now, per that executive who spoke to Semafor, the 2030 production target has been raised to 2.3 million barrels of oil equivalent daily. “We believe our operating costs are the lowest in the industry, which means we get more out of each barrel we produce,” Bart Cahir, senior vice president for upstream in the unconventional segment, told the publication. “That gives us tremendous resilience when you get into softer parts of the commodity cycle.” Exxon is not alone in this resilience bubble. ConocoPhillips is also there with its $22.5-billion acquisition of Marathon Oil last year. Chevron is also there with its pending takeover of Exxon’s partner in Guyana Hess Corp—unless Exxon wins the arbitration dispute on its right of first refusal for Hess’s Guyana assets—and a slew of smaller though not less significant deals that reshaped the face of the oil industry. Resilience has always been one of the goals of a consolidation push. Up until this year, the main driver of this desire to boost resilience was climate policy. Now, it’s Trump and his plans to pursue U.S. energy dominance, which inevitably means higher production, which in turn, inevitably means lower prices. U.S. Energy Secretary Chris Wright recently said that the shale industry in the country could keep pumping more oil even if the price of crude fell to $50 per barrel. “New supply is going to drive prices down. Companies are going to innovate, drive their prices down and consumers and suppliers will bounce back and forth,” Wright told the Financial Times. Not everyone agrees, however, and that includes another senior Exxon executive. In November, the president of upstream at the supermajor, Liam Mallon, said at an industry event that “We’re not going to see anybody in ‘drill, baby, drill’ mode.” “A radical change (in production) is unlikely because the vast majority, if not everybody, is focused on the economics of what they’re doing,” Mallon said, speaking at the Energy Intelligence Forum in London, and added that the fiscal discipline demonstrated by industry players in recent years was the new normal. Also, “Operators had most likely planned for prices to be over $70 this year, so at $50, rigs would likely drop and activity slow. And when the rigs drop in the Permian you lose the associated gas that the LNG industry is counting on at the end of the year,” Enverus managing director Andrew Gillick told the FT earlier this month. The suggestion that the industry’s resilience has limits has been supported by both the former boss of Pioneer Natural Resources and energy industry authority Daniel Yergin. Scott Sheffield said recently in an interview with Bloomberg that the U.S. shale industry would have to “hunker down” if prices dip even lower and wait out that dip. “You may have to lay off some people. You’ve got to focus on your best prospects. We’ll see what happens over the next two or three years,” Sheffield said, predicting prices of between $50 and $60 per barrel. Daniel Yergin, for his part, says simply that “at $50 a barrel, the economics of shale don’t work”, even though the breakeven price for the shale patch has fallen considerably, from $70 per barrel back in 2010 to just $45 per barrel this year, according to S&P Commodity Insights. Yet it bears noting that the breakeven price is not flat across the shale patch—and that some in the industry argue the lowest-price resources are close to depletion. Indeed, this depletion was quite probably one of the reasons for the merger and acquisition surge in the last couple of years, along with the record profits made amid the energy crunch in Europe. With top acreage running out, the only way to boost exposure to such top acreage was to buy it from another sector player or take over the sector player itself. This is exactly what Exxon and Chevron, and Conoco, and a dozen smaller companies have done, to improve their resilience to lower oil prices.
ONGC to import ethane to make up for changed Qatar LNG composition
Oil and Natural Gas Corporation (ONGC) plans to import ethane starting in mid-2028 to compensate for the altered composition of liquefied natural gas (LNG) sourced from Qatar, according to a tender floated by the state-owned firm. India imports 7.5 million tonnes per annum of LNG from Qatar. Under the deal, QatarEnergy supplies 5 million tonnes a year of LNG that contains methane (used to produce electricity, make fertiliser, converted into CNG or used as cooking fuel) as well as ethane and propane — feedstock to make LPG and petrochemicals — on a firm basis and the rest on best endeavour basis. This contract is coming to an end in 2028 and the revised contract signed last year envisages QatarEnergy supplying ’lean’ gas (one that is stripped of ethane and propane). ONGC spent about Rs 15 billion in setting up a C2 (ethane) and C3 (propane) extraction plant at Dahej in Gujarat. The C2/C3 so extracted was used as a feedstock in its petrochemical subsidiary, ONGC Petro additions Ltd (OPaL). With the changed composition of LNG, the company is now looking at importing ethane. ”ONGC Petro additions Ltd (OPaL), a subsidiary of ONGC, is having a mega grassroot petrochemical complex and having the largest standalone dual feed cracker in Southeast Asia. Plant is having a dual feed cracker i.e. a mix of Naphtha and C2 (Ethane), C3 (Propane) & C4 (Butane) as feedstock,” the tender document said.
Gujarat Gas Pipeline Commissioned: Chhara LNG Terminal to Grid
A natural gas pipeline, connecting the newly set up 5 million tonnes per annum LNG import terminal at Chhara in the Gir-Somnath district with the gas grid, has been commissioned, Gujarat State Petronet Ltd has said. The pipeline having capacity to ship 18 million standard cubic metres per day was developed by Gujarat State Petronet Limited (GSPL) at a cost of Rs 6.50 billion. The pipeline passes from the outskirts of the eco-sensitive zone of the Gir National Park & Wildlife Sanctuary, home to Asiatic lions. The pipeline was commissioned on March 20, GSPL said in a statement. A unit of Hindustan Petroleum Corporation Ltd (HPCL) has set up a facility to import liquefied natural gas (natural gas super chilled into liquid form for ease of transportation in ships) at Chhara. The liquefied natural gas (LNG) imported at the terminal is again turned into its gaseous state and moved to customers like power plants and fertilizer units through pipelines. The Chhara terminal is operated by HPCL LNG Limited, a subsidiary of state-run HPCL. “The work for engineering, procurement and construction of the 36-inch dia pipeline from HPCL LNG terminal at Chhara in Gir-Somnath district up to Lothpur in Amreli district of Gujarat, including despatch terminal at Chhara LNG terminal, valve stations and receiving terminal at Lothpur, was entrusted to the Mumbai-based construction company, Ace Pipeline Contracts, in September 2023. To cut down on the construction schedule, construction techniques such as automatic welding for welding of the 36-inch dia pipeline were deployed on the project,” the statement said. This project enhances the availability of natural gas in the country for use as an energy source in line with the Government of India’s target to raise the share of natural gas in the energy mix to 15 per cent by 2030 from about 6.2 per cent now.
Analysts forecast 2025 growth in India’s LPG imports to be slightly lower compared to previous year
The latest LPG Forecaster published by maritime research consultancy Drewry highlighted the 24 per cent surge in India’s 2024 LPG imports, propelled by strong residential consumption, which was in turn fuelled by the general elections, low domestic production and diversion of domestic LPG to the petchem sector. However, India’s import growth is likely to slow down in 2025 as residential demand eases, with the policy shifting towards natural gas and biofuels as LPG penetration nears saturation. Meanwhile, with almost all of India’s LPG supply coming from the Middle East, the US-China tariff war could encourage China to source more from the Middle East, forcing India to look elsewhere and thereby altering some changes in trading patterns. However, varying butane content in cargoes from the Middle East versus the US could make sourcing from the latter difficult. Residential and industrial sectors ignite surge in domestic LPG demand India’s LPG consumption surged in 2024 due to a combination of low global prices, the general elections and increase in rural LPG consumption. The country added 7.5 million low-income households under the Pradhan Mantri Ujjwala Yojna (PMUY) Phase 2 subsidy scheme, covering 103 million households since the scheme was launched in 2016. Stable LPG cylinder prices throughout 2024 further incentivised residential consumption while industrial consumption received a boost from, in particular, the ceramics industry in Gujarat’s Morbi region, with ceramic producers shifting to propane due to its favourable price compared to PNG on an energy basis. The Indian LPG market navigates seasonal ups and lows with demand peaking in the winter, remaining steady in the summer and declining in the monsoon. Additionally, elections, festivals and global fuel prices sway the LPG demand in the country.
No Windfall Tax on Oil Cos After New Law: Puri
Oil and gas companies will not face any new taxes like the windfall profits tax after the coming into effect of a new law that promises stability of fiscal regime, Petroleum Minister Hardeep Singh Puri said. Parliament has passed the Oilfields (Regulation and Development) Bill, 2024 that provides policy stability to investors, decriminalises provisions and promotes ease of doing business. “After this bill, it will be difficult to levy (new taxes like) windfall tax because somebody will sue us (for failing to keep the promise of fiscal stability),” he said at a reception he hosted to celebrate the passage of the bill. Investors looking to invest in finding and producing oil and gas want fiscal stability, and new taxes that seek to take away gains made when prices are high, without compensating for low or no margins when rates are low, are often a deterrent. India imposed a windfall profit tax on July 1, 2022 joining a growing number of nations that tax super normal profits of energy companies. At that time, export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and ATF and Rs 13 a litre (USD 26 a barrel) on diesel. A Rs 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied. The tax rates were reviewed every fortnight based on average oil prices in the previous two weeks. The levy was scrapped in December last year after 30 months. Puri said global oil majors have been exploring investing in India. Brazil’s Petrobras is in discussion with state-owned Oil India Ltd for exploring the Andaman basins, while Oil and Natural Gas Corporation (ONGC) is engaged with majors like ExxonMobil and Equinor for collaboration in deepwater exploration. The new legislation “creates conditions for all of them (international oil companies) to come and look at India,” he said. The Bill is part of the government’s reforms agenda to make it easier to find and produce crude oil (which is refined into fuels like petrol and diesel) and natural gas (which is used to generate power, make fertilizer or turn into cooking gas and CNG). It decriminalised some of the provisions of the original 1948 law by introducing penalties in place of imprisonment of up to six months. The bill introduces ‘petroleum lease’ and expands the definition of mineral oils to include crude oil, natural gas, petroleum, condensate, coal bed methane, oil shale, shale gas, shale oil, tight gas, tight oil and gas hydrate. This is with a view to raising domestic output and cutting reliance on imports. India currently imports more than 85 per cent of its crude oil needs and about half of its natural gas requirement. “We have 42 billion tonnes of oil and oil equivalent reserves and a sedimentary basin spanning 3.5 million square kilometers,” Puri said, adding most of it is untapped. The Statement of Objects and Reasons in the Bill states that the original Act of 1948 provided for a very different global energy context and required to be amended to meet the needs and aspirations of the country for energy access, energy security and energy affordability. “Further, there is an urgent and pressing need to increase domestic production of oil and gas to meet the rising demand for energy and reduce import dependence of the country. “In order to unlock valuable mineral oil resources, it is necessary to attract investment in the sector to infuse necessary capital and technology for expediting petroleum operations in the country by creating an investor friendly environment that promotes ease of doing business, prospects for exploration, development and production of all types of hydrocarbons, ensures stability, promotes adequate opportunities for risk mitigation, addresses energy transition issues including next-generation cleaner fuels and provides for a robust enforcement mechanism for ensuring compliance of the provisions of the said Act,” it said.
India’s LNG imports from the US at record 7.25 BCM in 2024
India’s imports of liquefied natural gas (LNG) from the US surged to 256.05 billion cubic feet, or roughly 7.25 billion cubic meters (BCM), during 2024 calendar year (CY) — the highest on record According to the US Energy Information Administration (EIA), India’s LNG imports from the US rose by more than 55 per cent year-on-year (y-o-y) during CY 2024. Compared to 2022, imports more than doubled. More than 15 BCM per year of new sales and purchase agreements were signed in 2024, as per the International Energy Agency (IEA). The previous high was registered in 2021 when India imported 5.56 BCM of LNG from the North American country, which overtook the UAE as India’s second largest LNG supplier in 2023 CY, after Qatar. In the same year, the US also became the world’s largest LNG exporter, accounting for 21 per cent of the market, followed by Australia and Qatar. A top government official said that oil and gas volumes from the US will rise “for sure”. However, the scope is higher for LNG considering that India generally imports light sweet crude oil from the US (WTI), which yields more petrol. Logistics and crude costs are the key as Middle East crude freight costs are around $1.50 per barrel, roughly one-third of the US costs.