The oil and gas sector remains a critical pillar of India’s energy ecosystem, contributing significantly to economic growth and ensuring energy security. In recent years, the sector has witnessed notable progress driven by regulatory reforms, increased private sector participation and the deployment of advanced technologies. As part of India’s broader energy transition agenda, the industry is also undertaking a range of clean energy initiatives aimed at improving operational efficiency and reducing its carbon footprint.
Unlocking E&P potential
Over the past several years, the government has implemented a series of transformative reforms in the oil and gas sector to enhance exploration and production (E&P) activity. A landmark policy shift, from a production sharing regime to a revenue sharing model for awarding contracts, has streamlined operations, reduced regulatory complexity and improved investor confidence. Complementing this are policy measures such as the opening up of previously restricted areas for exploration, the deregulation of crude oil, and the liberalisation of natural gas marketing and pricing, all of which have significantly reshaped the sector’s investment landscape. As a result of these interventions, more than 76 per cent of all active exploration acreage in India has been awarded in the past decade.
Introduced in 2016, the Hydrocarbon Exploration and Licensing Policy (HELP) was designed to increase domestic oil and natural gas production and reduce reliance on energy imports. A key feature of HELP is the Open Acreage Licensing Policy (OALP), which allows investors to submit expressions of interest based on E&P data available through the national data repository. In February 2025, the Ministry of Petroleum and Natural Gas (MoPNG) launched the 10th round of the OALP, offering 25 blocks across 13 sedimentary basins, covering a total area of 191,986.21 square km. Notably, 16 of these blocks, spanning nearly 98,000 square km, are located in zones that were previously restricted as no-go zones for exploration. The round includes six onland blocks, six shallow-water blocks, one deep-water block and 12 ultra-deep-water blocks.
Further bolstering the investment environment, the MoPNG has released the draft Petroleum and Natural Gas Rules, 2025. These introduce an investor-friendly stabilisation clause to protect upstream companies from adverse fiscal or legal changes. The draft rules also mandate infrastructure sharing, requiring lessees to offer excess capacity in pipelines and processing facilities to third parties on fair commercial terms, thus reducing redundancy and optimising resource use. The rules also strengthen environmental safeguards, mandating greenhouse gas monitoring, a framework for carbon capture and storage, and a site restoration fund with a five-year post-closure monitoring requirement.
In parallel, the Oilfield (Regulatory and Development) Amendment Bill, 2024, passed by the Lok Sabha in March 2025, seeks to modernise the legal framework to reflect contemporary market needs. The bill aims to attract greater private and foreign investment by introducing a unified petroleum lease regime, replacing the existing requirement for multiple permits across various types of hydrocarbons.
Scaling production amidst surging demand
India’s energy demand continues to rise sharply, driven by sustained economic growth, industrial activity and urbanisation. However, the country’s crude oil production is witnessing a consistent decline, intensifying its reliance on imports to meet domestic requirements.
During 2024-25, India’s domestic consumption of crude oil reached 239.2 million tonnes (mt), up from 194.3 mt during 2020-21, registering a CAGR of 4.2 per cent. In contrast, domestic crude oil production declined to 28.7 mt in 2024-25, from 30.5 mt in 2020-21. Offshore fields accounted for 53 per cent, while onshore fields contributed the remaining 47 per cent. The western offshore region remains the most productive, followed by Gujarat onshore (17 per cent), Assam onshore (16 per cent) and Rajasthan onshore (12 per cent).
Meanwhile, natural gas production has seen a positive trajectory. Output increased to 36,113 million metric standard cubic metres (mmscm) in 2024-25, up from 28,672 mmscm in 2020-21, reflecting a CAGR of 4.7 per cent. Natural gas consumption, including internal use, rose from 60,981 mmscm to 71,948 mmscm during the same period.
Despite these gains, India’s dependence on imports remains substantial. Import dependence for crude oil increased to 88.2 per cent in 2024-25 from 84.4 per cent in 2020-21. As the world’s third largest oil importer and consumer, the country spent $144.2 billion on net oil and gas imports in 2024-25, up from $113.4 billion in the previous fiscal year. This rising energy import bill reinforces the need for strategic sourcing, accelerated domestic exploration and production, and diversification of supply sources.
Pipeline growth and LNG reforms take centre stage
India’s natural gas pipeline network is undergoing a phase of accelerated development, with a strong focus on expanding pipeline connectivity and improving liquefied natural gas (LNG) terminal utilisation. The national gas grid is poised for significant expansion, with a total announced network length of 34,233 km. Of this, around 25,429 km is currently operational and 10,459 km is under construction. The expansion is aimed at enhancing last-mile connectivity, improving gas accessibility across regions and supporting the government’s ambition to increase the share of natural gas in the energy mix to 15 per cent.
Complementing the pipeline network is the country’s LNG infrastructure. Presently, India has eight operational LNG terminals with a cumulative regasification capacity of around 52.7 million metric tonnes per annum (mmtpa). These terminals are strategically located at Dahej, Hazira, Kochi, Dabhol, Ennore, Mundra, Dhamra and Chhara, serving as key entry points for imported gas.
To address issues of underutilisation and ensure more efficient use of existing assets, the Petroleum and Natural Gas Regulatory Board (PNGRB) recently introduced the LNG Terminal Regulations, 2025. This marks a major step towards improving India’s gas infrastructure efficiency and transparency. The new regulations apply to terminals commissioned from October 1, 2007, and require mandatory registration by operators. They also mandate the public disclosure of key charges, including regasification tariffs, truck‑loading fees and boil-off gas charges.
Expanding CGD infrastructure
India’s city gas distribution (CGD) network is witnessing rapid expansion, driven by strong policy support and rising demand for cleaner fuels. As of May 2025, the number of compressed natural gas (CNG) stations in the country has reached 8,154, more than doubling from 3,101 stations in 2020-21. Similarly, the total piped natural gas (PNG) connections, including domestic, industrial and commercial connections, has reached 15.33 million, a twofold increase over 2020-21 (7.86 million).
In parallel, the central government is actively promoting the use of compressed biogas (CBG) through various policies and schemes. As part of these efforts, Megha City Gas Distribution Private Limited recently commissioned a CBG station in Yergatti, located in the Belagavi geographical area of Karnataka. In June 2025, the Delhi government inaugurated a 2.5 tonne per day capacity bio-CNG plant in Kamar village near Kosi Kalan. In a significant scale-up, Hindustan Petroleum Corporation Limited (HPCL) has announced plans to invest around Rs 20 billion to develop 24 CBG plants nationwide.
On the regulatory front, PNGRB is working to enhance gas affordability and accessibility by amending the unified tariff regulations for natural gas pipeline transportation. Under the revised regulations, the tariffs, currently ranging from Rs 110 to Rs 120 per metric million British thermal unit (mmBtu), are expected to drop to the range of Rs 50-Rs 55 per mmBtu. The recent amendments to the Natural Gas Pipeline Tariff Regulations, 2025 aim to simplify tariffs and improve access to natural gas across India while balancing the interests of pipeline operators, CGD companies, investors and consumers. These developments are expected to further accelerate the shift towards a gas-based economy and reinforce India’s broader clean energy goals.
Capacity expansion and strategic investments reshaping downstream sector
India is a major player in the global refining landscape, ranking as the second largest refiner in Asia and the fourth largest globally. As of April 2025, India has 22 operational refineries, with a cumulative installed refining capacity of 258.1 mmtpa. Private entities account for around 34.3 per cent of this capacity.
Several capacity augmentation projects are under way across various refineries in the country. For instance, Chennai Petroleum Corporation Limited is reworking the configuration of its proposed 9 mt Cauvery basin refinery in Nagapattinam. The project, with an investment of Rs 364 billion, will focus on enhancing the petrochemical components.
In the Northeast, Numaligarh Refinery Limited has undertaken a major expansion project to triple its refining capacity from 3 mtpa to 9 mtpa by December 2025.
In a major milestone, India is set to commission its first greenfield integrated refinery complex in nearly a decade, in partnership with HPCL Rajasthan Refinery Limited. The refinery is designed to process over 83 per cent imported medium-grade crude, complemented by domestic crude. Further, Bharat Petroleum Corporation Limited is planning to establish a 9 mtpa oil refinery-cum-petrochemical complex in Andhra Pradesh. With an estimated cost of Rs 950 billion, this will be India’s most expensive refinery project.
Leveraging technology for efficiency and growth
The oil and gas sector has been actively adopting new and advanced technologies to ensure efficient operations across the country. The integration of IT-OT technologies is enabling real-time asset monitoring, predictive maintenance and data-driven decision-making across the value chain.
CGD companies are deploying supervisory control and data acquisition (SCADA) systems across extensive pipeline networks to monitor and control operations remotely. Efforts are also under way to integrate geographic information systems (GIS) with SCADA platforms, enabling geospatial visualisation, faster diagnostics and improved asset management.
In parallel, smart gas meters are gaining traction in the domestic and commercial segments. These meters offer real-time consumption data, accurate billing and enable consumers to better manage their energy usage, while also aiding utilities in reducing losses and enhancing service delivery. According to the ICF, based on typical market segmentation, smart gas meters are estimated to grow from $26 million in 2024 to nearly $91 million by 2033. This growth will be driven by CGD network expansion, digitalisation, government support and push towards prepaid and advanced metering infrastructure.
The convergence of automation, IoT and data analytics is expected to further transform the oil and gas sector, making it smarter, safer and more consumer-centric in the coming decade.
India’s energy future
Looking ahead, India is positioning itself as a major refining hub in Asia, backed by steady investments in capacity augmentation and infrastructure development. While the country is making gradual strides towards cleaner fuels, it is expected to remain reliant on fossil fuels, at least until 2040, to meet its growing energy demand.
In parallel, the CGD segment is poised to play an increasingly pivotal role in the natural gas ecosystem. With the rapid expansion of CNG and PNG networks, the CGD sector is projected to emerge as the largest consumer of natural gas in India in the coming years.
Overall, the country’s role in the global oil and gas market is expected to expand substantially, supported by strong growth in its economy, population and demographics.
Sidra Siddiquie
