Oil and gas industry in India

India Oil And Petroleum Industry Indian Oil Infrastructure
Industrial infrastructure
Key Crude Oil Refineries
From top, left to right: Haldia Refinery ; Paradip Refinery ; Indian Oil Logo ; Vizag Refinery (World's heaviest reactor erection for RUF unit); Essar Oil Refinery , ONGC Oil Platform Bombay High; BPCL Logo; Jamnagar Refinery

The petroleum industry in India dates back to 1889 when the first oil deposits in the country were discovered near the town of Digboi in the state of Assam. The natural gas industry in India began in the 1960s with the discovery of gas fields in Assam and Maharashtra (Mumbai High Field). As of 31 March 2018, India had estimated crude oil reserves of 594.49 million metric tonnes (Mt) and natural gas reserves of 1339.57 billion cubic metres of natural gas (BCM). As of 31 March 2024, India had estimated crude oil reserves of 569.77 million metric tonnes (Mt) and natural gas reserves of 1,246.49 billion cubic metres of natural gas (BCM).^[1]

India imports about 82% of its crude oil requirements, making it one of the world's largest oil importers.^[2] The government had earlier aimed to reduce this dependency to 67% by 2022 through increased domestic hydrocarbon exploration, promotion of renewable energy and use of indigenous ethanol fuel.^[3] India was the world's second-largest net importer of crude oil and petroleum products, with total imports of 205.3 Mt in 2019.^[4]As of the 2024–25 fiscal year, India's reliance on imported crude oil reached a record 88.2%, up from 87.8% in the previous year.^[5]

By March 2021, India's domestic crude oil production output fell by 5.2% and natural gas production by 8.1% in the FY21 as producers extracted 30.4917 Mt of crude oil and 28.67 BCM of natural gas in the fiscal year.^{[6][7][8][9][10]} In August 2021, crude oil production decreased by 2.3%, but there was a 20.23% increase in homegrown natural gas.^[11][12]

India offers US$ 12 per MMBTU whereas natural gas exploration and production cost is capped at $3 in many markets. Oil recovery is still only 30–35 per cent in India whereas state of the art technology can double it.^[13]

The first oil deposits in India were discovered in 1889 near the town of Digboi in the state of Assam.^[14]

The natural gas industry in India began in the 1960s with the discovery of gas fields in Assam and Gujarat. Natural gas gained further significance after the discovery of large reserves in the South Basin fields by ONGC in the 1970s.^[15][16]

As of 31 March 2024, India had estimated crude oil reserves of 569.77 Mt, declining from the previous year. The largest reserves are found in the Western Offshore (39.0%) and Assam (26.3%). The estimated reserves of natural gas in India as of 31 March 2024 stood at 1,246.49 BCM. The largest reserves of natural gas are located in the Eastern Offshore (39.5%) and the Western Offshore (23.1%).^[17]

The following table shows the estimated crude petroleum and natural gas reserves in India by state/region as on 1 April 2024.^[18]

As of 1 April 2024, the estimated reserves of crude oil in India stood at 671.40 million tonnes, compared to 669.47 million tonnes in the previous year.^[19] The largest share is concentrated in the Western Offshore region, which accounts for about 32% of the total reserves, followed by Assam, holding 22%, and Gujarat with 18%. Other states such as Rajasthan, Tamil Nadu, Arunachal Pradesh, Nagaland, and Tripura together contribute smaller shares.^[19]

As of 1 April 2024, the estimated reserves of natural gas in India were 1,094.19 billion cubic metres (BCM).^[19]

The largest reserves are located in the Western Offshore region (31%), followed by the Eastern Offshore Basin (24%), Assam (15%), and Gujarat (5%). Other reserves are distributed across Rajasthan, Tamil Nadu, Tripura, and coal bed methane (CBM) fields in Madhya Pradesh, Jharkhand, and West Bengal.^[19]

Building petroleum reserves like underground tank storage, above-ground tank storage, and fully developed and ready-to-exploit in situ reserves is a lucrative proposition for an oil-importing country like India as the oil exporters charge exorbitant prices when the oil demand is little more than supply.^[20] The Indian Strategic Petroleum Reserve (SPR) is an emergency fuel store of total 5 Mt or 31.5 million barrels (5.0 million cubic metres) of strategic crude oil enough to provide 10 days of consumption which are maintained by the Indian Strategic Petroleum Reserves Limited.^[21][22][23] Strategic crude oil storages are at 3 underground locations in Mangalore, Visakhapatnam and Padur, Udupi district, Karnataka with ready access to the refineries on the east and west coasts.^[24] Another method to build up strategic petroleum reserve at low cost is to develop a proven oil field for higher oil extraction rate and keeping it reserved for full production on an intermittent basis when the global oil price cross the set upper limit.^[25][26]

Two more SPRs will add strategic petroleum reserves of 12 days in addition to 10 days of reserves achieved in Phase I. These SPRs under Phase II will be located at Chandikhol in Odisha and Padur in Karnataka. Indian refiners maintain 65 days of crude storage, and when added to the SPR storage planned and achieved takes the Indian crude storage tally to 87 days. This is very close to the storage of 90 days mandated by IEA for member countries.^[27] The total storage figure is excluding the storage capacity of petroleum products with the marketing agencies and bulk consumers.^[28] India is also considering to store crude oil in other countries.^[29][30]

India's domestic crude oil and natural gas production has generally declined over the past decade.^[31] In 2023–24, the country produced 29.88 Mt of crude petroleum, showing a marginal increase of 2.3% from the previous year. Production of natural gas was 35.18 BCM, an increase of 3.8% over 2022–23.

Over the decade from 2013–14 to 2023–24, crude oil production declined at a compound annual growth rate (CAGR) of −1.9%, while natural gas production recorded a positive CAGR of 0.4%.^[31]

India also produces petroleum products, and output reached 257.25 Mt in 2023–24, a growth of 3.2% compared to the previous year. Among petroleum products, high-speed diesel oil accounted for about 40%, followed by motor gasoline (15%). Production of petroleum products grew by a CAGR of 2.0% over the last decade.^[31]

ONGC is developing the KG-DWN-98/2 block in the Krishna Godavari basin with capital expenditures of about US$5.07 billion (approximately ₹340 billion), leading to oil production from the field to the extent of 25 Mt and 45 BCM of natural gas.^[32]

Oil fields in Rajasthan are emerging as major producers, while Reliance BP has also started production from Krishna Godavari basin gas fields, enhancing indigenous gas output.^[33]

India has also set targets for producing 15 Mt/year of compressed biogas (CBG), a carbon-neutral fuel, to reduce import dependence and replace CNG which is largely imported in the form of LNG.^[34]

As of 31 March 2024, India had 23 crude oil refineries, comprising 18 state-owned, 3 privately owned, and 2 joint-venture refineries.^[31] The country’s total oil refining capacity stood at 256.8 Mt per year, up from 248.9 Mt in 2020–21, making India the second-largest refiner in Asia after China.

In 2023–24, refineries in India processed 256.1 Mt of crude oil, achieving an overall capacity utilization of about 99.7%.^[31]

With a refining capacity of 80.55 Mt per year, Indian Oil Corporation (IOC) remains the largest refiner in the country. IOC’s refineries processed 77.6 Mt of crude oil in 2023–24. Other major refiners include BPCL with 35.3 Mt capacity and HPCL with 20.6 Mt.^[31]

India is a major exporter of petroleum products, with net exports of over 62 Mt in 2023–24, largely comprising diesel, naphtha, and ATF.^[31]

Many Indian refineries process the lower end residual fuel oil with higher sulphur content to maximize production of lighter fuels such as petrol, diesel, and aviation turbine fuel by installing coker units.^[35] This process generates petroleum coke (petcoke), a solid fuel with high calorific value but also high sulphur content.

Since several developed countries have banned the direct use of high-sulphur petcoke and residual oils, Indian refiners have adopted technologies such as gasification and methanation to convert them into synthetic natural gas (SNG) and methanol.^[36]

Residual fuel oil is also consumed in the shipping sector, which accounted for nearly 38% of its global use prior to 2020. Under the MARPOL convention, the International Maritime Organization mandated that from January 2020, marine vessels must use fuels with sulphur content below 0.5% (and 0.1% in designated Emission Control Areas).^[37]

The implementation of these rules significantly reduced demand for high sulphur fuel oil (HSFO), causing prices to fall. However, advanced refineries with vacuum distillation and coker units were able to economically process HSFO into cleaner fuels and petcoke.^[38]

During the COVID-19 pandemic, Indian refineries temporarily operated at lower capacities due to steep declines in demand for petroleum products, particularly aviation turbine fuel and petrol.^[39]

Today, petcoke continues to be in high demand, especially in the cement industry, while refiners like Reliance are increasingly integrating gasification projects at Jamnagar to convert residual streams into value-added fuels and chemicals.^[40]

India is the third largest consumer of crude oil in the world, after the United States and China.^[41]

The estimated total consumption of crude oil in India rose from 204.12 Mt in 2011–12 to 221.77 Mt in 2020–21 with a CAGR of 0.93%. Consumption declined by 12.82% in 2020–21 compared to the previous fiscal primarily due to disruptions caused by the COVID-19 pandemic. The estimated total consumption of natural gas was 60.64 BCM, declining by 0.67% over the previous fiscal year.^[42]

As of 2023–24, the estimated total consumption of crude oil in India was 233.3 Mt, an increase of 5.4% from the previous fiscal year.^[43] Consumption of natural gas in 2023–24 stood at 64.1 BCM, showing a recovery after earlier declines during the COVID-19 period.^[43]

Among petroleum products, high speed diesel accounted for the largest share (about 37%) of total consumption, followed by petrol (16%), liquefied petroleum gas (15%), petroleum coke (7%), and naphtha (6%).^[43] The largest consumers of natural gas were the fertilizer industry (28%), power generation (18%), and transportation (15%). Gas consumption was divided between energy use (around 60%) and non-energy use (about 33%).^[43]

Crude oil and natural gas are minor sources of electricity generation in India compared with coal, hydropower, solar and wind.

As of 31 March 2024, the installed capacity of gas-based power plants in India was 24,665 MW, accounting for about 5.7% of the total installed capacity.^[44] However, many of these gas-based plants continue to operate below potential due to limited domestic gas availability.^[43]

Diesel is a very small contributor. The total installed capacity of diesel-based power plants in the utility sector was 510 MW in March 2024, accounting for less than 0.1% of total capacity.^[45]

Excluding the utility sector, India has an estimated 90,000 MW capacity of diesel generator (DG) sets above 100 kVA for backup power needs, which is about one-third of the country’s utility-scale installed capacity.^[46] In addition, there are innumerable DG sets below 100 kVA capacity used in residential, commercial, agricultural and telecom sectors to provide backup during power outages.^[47]

The electricity sector remains a major consumer of natural gas, though its share has gradually declined with rising use of renewables and coal.

India is the world’s second-largest importer of crude oil after China, and remains highly dependent on foreign supplies to meet its energy demand.^[4]

Net imports of crude oil increased from 171.73 Mt in 2011–12 to 226.95 Mt in 2020–21, and further to about 232.5 Mt in 2022–23.^[48] Imports of natural gas (mainly as LNG) increased from 18 BCM in 2011–12 to 32.86 BCM in 2020–21, and reached 35.5 BCM in 2022–23, recording a CAGR of about 9.4% over the decade.^[48]

Despite the dependence on crude imports, India has built up a large refining capacity, making it a net exporter of petroleum products. Exports of petroleum products rose from 38.94 Mt in 2008–09 to 56.76 Mt in 2020–21, and stood at around 62 Mt in 2022–23.^[48]

India’s import dependence was estimated at 87.3% for crude oil and 47.3% for natural gas in 2022–23.^[48] This high reliance on imports reflects the country’s limited petroleum reserves and is a major challenge for energy security.

To reduce this dependence, India is actively diversifying its sources of crude oil imports and simultaneously expanding renewable energy capacity (solar, wind, hydro, and biomass). These efforts are aimed at reducing both import dependence and the environmental impacts of petroleum product consumption, which contributes significantly to air pollution.^[49]

India was the world’s second-largest crude oil importer in 2023–24, importing approximately 232.5 million tonnes (MMT).^[50]

By value, the largest suppliers of crude oil to India in 2023–24 were:

- Crude imports from the Commonwealth of Independent States (CIS)—mainly Russia, Kazakhstan, and Azerbaijan —rose to approximately 39% of India’s overall imports in 2023–24. - Meanwhile, the share from **West Asia** (Saudi Arabia, Iraq, UAE, Kuwait]]) declined to around 46%, hitting historic lows amid shifting supply dynamics.^[51]

By transacting in crude futures trading in MCX or BSE, crude oil products consumers (petrol, diesel, jet fuel, etc.) in India can hedge their risk while purchasing the crude oil products in Indian currency.^[52][53] The futures trading is cash settled on expiry date taking WTI crude or Brent crude settlement price as reference.^[54][55]

The quality of crude oil which is imported by India from Persian Gulf is called Indian Basket crude.^[56][57] It is weighted average of Dubai and Oman (sour) and the Brent Crude (sweet) crude oil prices. However, the exporting countries charge premium or give rebate on the Indian Basket price by declaring official selling price (OSP) depending on market conditions every month.^[58]

Indian Gas Exchange (IGX) is the online trading platform for natural gas with delivery hubs at Dabhol and Jaigad, both in Ratnagiri, Maharashtra; Dahej and Hazira in Gujarat; and Kakinada in Andhra Pradesh.^[59] The Petroleum and Natural Gas Regulatory Board (PNGRB) was created in the year 2005 to regulate downstream activities in the petroleum and natural gas sector.^[60] Buyers can transport the purchased natural gas from these hubs on a daily basis to their consumption points through the existing cross country gas pipelines (owned by GAIL and others) for a fee.^[61]

Fuel prices in India are deregulated and revised on a daily basis, but the final pump price continues to include substantial central and state taxes. On average, central and state levies together account for about 45–55% of the retail price of petrol and diesel.^[62]

• The Central excise duty forms about 24–26% of the retail price.
• State taxes (VAT) vary across states, but typically add 20–25%.
• In addition, royalty and oil development cess are collected on domestically produced crude oil and natural gas.

As a result, nearly half of the consumer price of petrol and diesel represents government taxation revenues.

For example:

• In Bengaluru, Karnataka (May 2011), petrol retailed at ₹71.09 (84¢ US)/L, of which taxes accounted for 47% of the final price.^[63]
• In Delhi (April 2018), the dealer base price was ₹31.08 (37¢ US)/L, with central excise (₹19.48 (23¢ US)), state VAT (₹15.70 (19¢ US)) and dealer commission (₹3.60 (4.3¢ US)) bringing the retail price to ₹73.83 (87¢ US)/L.^[64]

In 2020, during the COVID-19 pandemic, global oil prices fell sharply, but the Government of India raised excise duties on petrol and diesel to shore up revenues rather than passing on the benefit to consumers.^[65]

The domestic natural gas price for producers such as ONGC and Oil India is notified every six months by the Government of India, based on a formula linked to benchmark gas prices in the United States, Russia, Canada and the United Kingdom. LNG import prices, however, are linked to international crude oil benchmarks.

• For April–September 2020, the domestic gas price was cut to about US$2.5 per million MMBtu, the lowest since pricing reforms began.^[66]

In 2022, a new Administered Price Mechanism (APM) reform linked domestic gas prices to 10% of the Indian crude basket price, subject to a floor and ceiling, to provide stability to both producers and consumers.^[67]

This reform has kept APM gas prices around US$6.5–7.0/MMBtu during 2023–24.^[68]

City Gas Distribution (CGD) Projects, under Ministry of Petroleum and Natural Gas, are network of gas pipelines planned across the country to improve connectivity to piped (PNG) and compressed (CNG) natural gas fillings stations^[69][70]

India has approximately 126,502 petrol stations as of August 2025.^[71] Key players include:

• Indian Oil Corporation (IOCL): ~26,849 stations
• Bharat Petroleum Corporation Limited (BPCL): ~14,675 stations
• Hindustan Petroleum Corporation Limited (HPCL): ~14,161 stations
• Nayara Energy: over 6,500 stations, with 400 more planned in 2025.^[72]
• Reliance Industries (Jio-BP): ~1,916 stations.^[73]
• Other private sector companies contribute the remaining stations.^[74]

Regional highlights:

• Punjab: ~3,300 petrol stations

The growth reflects rising vehicle ownership, urbanization, and economic development. Expansion of alternative fuels such as CNG and EV charging stations is also underway.^[75]

Nayara Energy operates 6386 fuel stations in the country.

Shell also opened petrol stations in India. Shell currently has around 350 stations majorly present in the South and Western States of the country i.e. Tamil Nadu, Karnataka, Maharashtra, Telangana, Andhra Pradesh and Gujarat ^[76]

Essar had 2,225 petrol stations in India which were supplied with petrol and diesel from its 280,000 barrels per day (45,000 m³/d) refinery in Vadinar, Gujarat.^[77]

Indraprastha Gas Limited has opened exclusive CNG fuel stations in India, particularly in the capital city of Delhi. In recent years, state oil marketing companies have been opening petrol stations, constructed with minimal investment,^{[clarification needed]} in remote rural areas to help local farmers. These stations sell pesticides, seeds, lanterns, and other goods that are needed by farmers besides petrol and diesel.

The numbers of petrol stations per owning company in the states and union territories of India as of 31 March 2016 were:^[78]