The oil and gas sector is among the six core industries in India and plays a major role in influencing decision making for all the other important sections of the economy. In 1997–98, the New Exploration Licensing Policy (NELP) was envisaged to fill the ever-increasing gap between India’s gas demand and supply. India’s economic growth is closely related to energy demand; therefore the need for oil and gas is projected to grow more, thereby making the sector quite conducive for investment.The Government of India has adopted several policies to fulfil the increasing demand. The govern-ment has allowed 100 per cent Foreign Direct Investment (FDI) in many segments of the sector, in-cluding natural gas, petroleum products, and refineries, among others. Today, it attracts both do-mestic and foreign investment, as attested by the presence of Reliance Industries Ltd (RIL) and Cairn India.India is expected to be one of the largest contributors to non-OECD petroleum consumption growth globally. Total oil imports rose 4.24 per cent year-on-year to US$ 86.45 billion in 2016-17. India’s oil consumption grew 8.3 per cent year-on-year to 212.7 million tonnes in 2016, as against the global growth of 1.5 per cent, thereby making it the third-largest oil consuming nation in the world.India is the fourth-largest Liquefied Natural Gas (LNG) importer after Japan, South Korea and China, and accounts for 5.8 per cent of the total global trade. Domestic LNG demand is expected to grow at a CAGR of 16.89 per cent to 306.54 MMSCMD by 2021 from 64 MMSCMD in 2015.The demand of Petroleum Oil and Lubricants grew at a Compound Annual Growth Rate (CAGR) of 5.6 per cent under the 12th Five Year Plan (2012-17)The country’s gas production is expected to touch 90 Billion Cubic Metres (BCM) in 2040 from 23.09 BCM in FY2016-17 (till December 2016). Gas pipeline infrastructure in the country stood at 16,240.4 km in November 2016.State-owned Oil and Natural Gas Corporation (ONGC) dominates the upstream segment (exploration and production), and produced around 1,847 thousand metric tonnes (TMT) of crude oil, as against the country’s 2,939 MT oil output in April 2017. The company also accounted for 57 percent of the country’s domestic crude oil production in 2016-17.According to data released by the Department of Industrial Policy and Promotion (DIPP), the petro-leum and natural gas sector attracted FDI worth US$ 6.86 billion between April 2000 and June 2017.IntroductionMarket Size4 DISCLAIMER This document is strictly private, confidential and personal to its recipients and should not be copied, distributed or reproduced in whole or in part, nor passed to any third party.Following are some of the major investments and developments in the oil and gas sector:?Bharat Petroleum Corporation Ltd (BPCL) plans to invest Rs 1.08 trillion (US$ 16.88 billion) over the coming five years for expansion of operations across business segments, of which the company plans to invest Rs 45,000 crore (US$ 7.03 billion) in the petrochemicals segment.?Vedanta Ltd has planned a capital expenditure of US$ 2.4 billion over FY 2017-18 and FY 2018-19, across various projects such as Hindustan Zinc, increasing volumes for its oil and gas busi-ness and to double the capacity at the Tuticorin copper smelter.?Reliance Industries Ltd (RIL), along with its partner BP plc, has decided to invest US$ 6 billion for the development of new R-series gas fields in the KG-D6 block.?Oil and Natural Gas Corporation (ONGC) plans to invest US$ 11 billion in exploration and de-velopment of blocks in the Krishna Godavari (KG)basin, which is expected to increase gas pro-duction by around 30 per cent over the next three-four years.?The merger process of Vedanta and Cairn India was completed on April 11, 2017, thereby cre-ating a combined entity with a market capitalisation of US$ 15.6 billion and a free float of 49.9 per cent.?Indian Oil Corporation expects to invest Rs 20,000 crore (US$ 3.1 billion) over the next four years covering 20 projects in order to add a 25 million tonne (MMT) pipeline to its existing pipe-line capacity of 93.7 MMT.?ONGC has signed an agreement with the Government of Andhra Pradesh to invest around Rs 78,000 crore (US$ 11.7 billion) in the Krishna Godavari basin for producing hydrocarbons by FY 2021-22.Government InitiativesSome of the major initiatives taken by the Government of India to promote oil and gas sector are:? The Government of India plans to merge state oil companies to create integrated oil major that could compete globally, and utilise the synergy between various state entities for achieving efficiency and cost competitiveness in order to create more value for all shareholders.? The Government of India plans to unveil a new policy for renewing and extending the lease of 28 oil and gas blocks in the country, with a view to attract more investments into these fields.? The Cabinet Committee on Economic Affairs, Government of India, has approved the awarding of contracts on 23 onshore and 8 offshore contract areas of discovered small oil and gas fields that earlier belonged to Oil and Natural Gas Corporation (ONGC) and Oil India Lim-ited (OIL).


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