India’s energy conundrum can be distilled into a few imperatives. Economic growth is tied to increased energy consumption. The energy mix is predominantly fossil fuel based and will remain so. Demand for oil and gas is growing while domestic oil production is declining.
India imports 88 per cent of its oil and over 50 per cent of its gas. Imports stress the trade account and leave India exposed to the vagaries of geopolitics and resultant price volatility. There is also a need to move to cleaner fuels – ideally renewables and green hydrogen, but also gas instead of diesel, petrol and coal. The National Green Hydrogen Mission is creating hydrogen hubs and building production capacity. There are also plans to add green fuels such as compressed biogas (CBG) into the mix.
Policy flows from these imperatives. There is a need to encourage exploration, which should lead to more domestic production. Upstream players want fast-tracked single-window clearances, more data and easier rules for partnerships with global players.
The gas sector has a target of taking gas to a share of 15 per cent in the energy mix from the current ~7 per cent. This involves building national pipeline infrastructure and city gas distribution networks to bring gas to homes, industrial consumers and transporters. India is also adding refining capacity. The refining sector is globally competitive and capacity exceeds domestic consumption, enabling high-value exports. India could become a major refining hub.
Around 25,429 km of gas pipelines are operational, and 10,459 km is under construction. Refining capacity augmentation projects are under way across various refineries, with Hindustan Petroleum Corporation Limited also set to commission a new greenfield facility.
Upstream, midstream and downstream, the industry is inducting technology ranging from supervisory control and data acquisition systems and geographic information systems to smart gas meters and IT in order to increase operational efficiencies.
Policy-wise, there has been a shift to revenue sharing to promote exploration and production (E&P). Previously restricted no-go zones have been opened, and crude and gas have been deregulated with marketing and pricing freedom.
The Hydrocarbon Exploration and Licensing Policy and its Open Acreage Licensing Policy (OALP) allows investors to select blocks based on data at the national data repository. The 10th round, OALP-X, was launched in February 2025.
The draft Petroleum and Natural Gas Rules, 2025 include an investor-friendly stabilisation clause to protect upstream players from adverse fiscal or legal changes. Lessees may offer pipeline and facility capacity to third parties. Environmental measures are being strengthened through greenhouse gas monitoring, a carbon capture framework and a site restoration fund.
The Oilfield (Regulatory and Development) Amendment Bill, 2024, introduces a single-permit system. The Petroleum and Natural Gas Regulatory Board (PNGRB) has introduced the LNG Terminal Regulations, 2025 to tackle the underutilisation of liquefied natural gas terminals. PNGRB is also set to reduce pipeline transport tariffs to around half of the current rates.
The new rules do encourage joint ventures to induct MNCs with deep pockets and expertise in E&P. Oil India Limited has an agreement with Brazil’s Petrobras to jointly bid for blocks. British Petroleum has a partnership with Oil and Natural Gas Corporation Limited, with a focus on the Mumbai High Field.
But challenges such as land acquisition and right of way continue to hinder the gas roll-out. Another issue is the need to import equipment; domestic manufacturing must ramp up. Delays in environmental clearances, especially in ecologically sensitive areas, also slow things down.
The reorganisation of oil and gas across the value chain is work-in-progress. Policy seems to be headed in the right direction, but an acceleration of processes would definitely have positive ripple effects across the energy space.