Petroleum & Natural Gas constitutes over 16% of GDP and includes
transportation, refining and marketing of petroleum products and gas
$90 billion revenues in FY 05
India has a crude oil refining capacity of about 127 MMT
Natural gas demand is about 150 MMSCMD (2004) with only 54% being met
through domestic sources
Production of petroleum products has grown at 6.5% p.a. during the last 3
years
Over 190 MMT of refining
capacity required by 2010
Large growth projected
in fuel retail
STRUCTURE
Public sector companies play a major role in oil refineries, oil and gas
pipelines and gasoline retail outlets
Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum
together account for about 70% of India's refining capacity and
own/franchise most gasoline retail outlets
Gas Authority of India Ltd. (GAIL) owns and operates a large gas grid
Reliance Industries and Essar Group are the major Indian Private sector
participants
Reliance is expanding its Jamnagar refining capacity to 60 MMTA.
Expected to be the single largest grassroot refinery in the world
Shell has invested in refining and retail; British Gas has invested in
city gas distribution
BP, Total, Exxon Mobil and Eni are also present in India. While they are
currently in marketing lubricants, Total and BP plan to expand in other
value chain segments
POLICY
100% FDI is allowed in petroleum refining, petroleum product and gas
pipelines and marketing/retail through the automatic route
For entry into petroleum product marketing/retail, an investment in an
upstream venture of over $450 million is required
Virtual administrative price control of government over most petroleum
products
Petroleum and Natural Gas Regulatory Board Bill to be enacted shortly will
result in the setting up of an Independent Regulator for Oil & Gas
Natural Gas Pipeline Policy to be enacted shortly
Major players and presence in value chain
Company
Revenue
($ billion) FY 05
Upstream
Midstream -Pipelines
Downstream
Refining
Retail Outlets
Public Sector
IOC
31.4
BPCL
14.9
HPCL
14.4
ONGC
14.1
Domestic Private Players
Reliance Industries
15.4
International Private Players
Shell (FY 04)
268.7
British Gas (Centrica)
(FY 04)
33.5
Cairn Energy (FY 04)
0.2
Source: BP Statistical Review of World Energy - 2005, Capitaline Fortune,
Ministry of Petroleum and Natural Gas, Government of India.
Source: Directorate General of Hydrocarbons,
Ministry of Petroleum & Natural Gas, BP Statistical Review of World Energy
OPPORTUNITY
OUTLOOK
High GDP growth rate, rapidly growing vehicle population and better road
infrastructure will drive consumption of petroleum products
Industry is expected to grow at a CAGR of about 8% to 10%
Over 190 MMT of refining capacity required by 2010
Over 120MMSCMD of additional demand for Natural Gas in the next five years
Recent gas finds and increased use of gas for power generation, petrochemicals,
fertilisers and city gas distribution
POTENTIAL
Several areas of unexploited potential, including:
City gas distribution
LNG (import) infrastructure - terminals, regasification, pipelines to
industrial consumers
Growing demand-supply mismatch provides opportunities for investment in the
entire value chain for petroleum (refining, product pipelines, storage and
retail) and Natural Gas
Investment need of $15 billion and $8 billion estimated in refining and
marketing respectively by 2010
