The oil and gas sector continues to serve as the backbone of the country’s energy landscape, powering growth and ensuring resilience amid shifting global dynamics. In recent years, the industry has undergone a significant transformation, driven by regulatory reforms, increasing collaboration with global players and the adoption of cutting-edge technologies. Aligned with India’s broader climate and decarbonisation goals, the oil and gas industry is also spearheading clean energy initiatives to enhance efficiency and curb emissions.
Demand uptick
The petroleum and oil sector continues to reflect the country’s growing energy needs, driven by steady economic activity and expanding transportation demand. India’s domestic consumption of petroleum products increased from 61.2 million tonnes (mt) in April-June 2024-25 to 61.8 mt in the corresponding period of 2025-26, a marginal increase of 0.98 per cent, largely driven by petrol and diesel demand. However, the production of petroleum products remained consistent at 70.1 mt during the same period. In the near term, consumption is expected to increase further, particularly for diesel, petrol, aviation turbine fuel and petroleum coke.
India still imports around 85 per cent of its crude oil requirements, leaving the economy vulnerable to global price fluctuations, supply disruptions and adverse geopolitical conditions. Reducing this reliance will help protect the country from external shocks. The Organisation of the Petroleum Exporting Countries forecasts India to outpace global peers in oil demand growth in 2025-26, increasing from 5.55 million barrels per day (bpd) in 2024 to 5.74 million bpd in 2025, and further to 5.99 million bpd in 2026, surpassing even China’s growth rate.
In a groundbreaking development, Assam has transitioned from being a mere supplier of crude oil to becoming the first state government to directly participate in upstream oil production. Following the discovery of hydrocarbons at the Namrup Borhat 1 well in Dibrugarh district, where the state holds a significant stake, Assam is set to play a direct role in driving production.
Favourable policy environment
The Petroleum and Natural Gas Regulatory Board (PNGRB) has introduced regulations to streamline access and enhance transparency for liquefied natural gas (LNG) terminal operations, enabling third-party access and uniform tariffs. Meanwhile, the fiscal policy may further diversify supplies. India is considering abolishing import taxes on US LNG to enhance its competitiveness and deepen bilateral energy ties. It is also building its long-term LNG portfolio. Notably, TotalEnergies has signed a 10-year agreement to supply 400,000 mt annually to Gujarat State Petroleum Corporation Limited starting 2026. India, currently the world’s fourth largest LNG buyer, will need to double annual imports by the end of the decade to meet growing demand due to rapid urbanisation and industrialisation.
Expanding pipeline network
India’s natural gas pipeline network is undergoing significant expansion, with a focus on enhancing connectivity, improving LNG terminal utilisation and increasing the share of natural gas in the energy mix.
This includes the expansion of the national gas grid, with a substantial portion currently under construction to improve last-mile connectivity and regional gas accessibility. The total announced length of the pipeline network is around 34,233km, of which around 25,429km is already operational and 10,459km is currently under construction. The pipeline expansion has prioritised last-mile connectivity to support city gas distribution (CGD) networks that deliver piped natural gas (PNG) directly to households and businesses. For example, in Motihari, Bihar, Bharat Petroleum Corporation Limited (BPCL) is implementing a Rs 20 billion CGD project to connect 50,000 households within a year, offering safer and more efficient energy access. Similarly, Guwahati, Assam, recently launched its first household piped gas supply, marking a tangible step in urban energy modernisation. These efforts highlight how the expanding grid is improving energy inclusivity.
Spearheading digital transformation
India is rapidly advancing the use of the industrial internet of things (IoT) across the value chain, integrating real-time sensor data, predictive diagnostics and proactive leak detection, including pipeline monitoring through remote sensors and drones.
The Numaligarh refinery, in partnership with Bharat Sanchar Nigam Limited, is rolling out India’s first 5G captive non-public network within a refinery. This ultra-secure, high-speed private network will enable the adoption of IoT, augmented reality, virtual reality training, real-time monitoring and digital twins, paving the way for advanced digital transformation across core industries.
Cairn Oil & Gas is also ramping up the deployment of advanced technologies and enhanced oil recovery techniques to promote domestic crude production. The company is preparing to monetise its Shale blocks in Rajasthan to deploy a high-performance rig equipped with advanced automation and real-time monitoring. It is also deploying drone-based surveillance, digital twins and 4D seismic mapping to rejuvenate mature fields and tap unexplored reserves.
Meanwhile, India is looking to develop a comprehensive deepwater exploration and production (E&P) technology ecosystem, in collaboration with Norway, as it prepares to explore over 250,000 square km of offshore territory under the Open Acreage Licensing Policy Round 10, one of the largest offshore bidding rounds in the world. Deepwater E&P technologies involve advanced methods, tools and systems used to locate, drill, extract and process oil and natural gas from reservoirs located deep beneath the ocean floor, typically at depths of more than 500 metres. The Indian government aims to leverage these collaborations to fast-track its offshore production capabilities, particularly in areas such as the KG basin, where deepwater blocks such as KG DWN 98/2 are producing oil.
Strategic offshore collaborations
As a major energy consumer, India is actively seeking strategic offshore collaborations to secure energy resources, acquire advanced technologies and enhance offshore E&P capabilities. The country’s first offshore oil and gas decommissioning project has been successfully completed by the Panna-Mukta and Tapti joint venture comprising Shell (30 per cent), Reliance Industries Limited (30 per cent) and the Oil and Natural Gas Corporation (ONGC) (40 per cent, operator). The project involved the safe removal of the mid- and south Tapti fields, including five platforms and pipelines, as well as the plugging of 38 wells. The project has set new benchmarks for safety, environmental standards and regulatory compliance. The initiative also strengthened local supply chains and contractor capabilities, supporting the “Make and Break in India” vision and marking a significant milestone in India’s offshore energy sector.
ONGC Videsh Limited and Petrobras have entered into an MoU to collaborate on upstream oil and gas ventures across Brazil, India and other countries. The agreement also includes cooperation in areas such as trading, digital innovation and low-carbon solutions. Meanwhile, Oil India Limited has signed an MoU with Petrobras focused on hydrocarbon exploration in India’s deepwater and ultradeepwater offshore regions, in line with the objectives of the government’s Hydrocarbon Exploration and Licensing Policy.
Growth in the refining segment
India is one of the world’s top refining hubs, with significant upgrades and expansions under way. With 22 operational refineries, the country’s cumulative installed refining capacity stands at 258.1 million tonnes per annum (mtpa).
Key ongoing projects include Hindustan Petroleum Corporation Limited’s refinery in Barmer, Rajasthan, which is a 9 mtpa facility with 88 per cent work completed. It is expected to be operational soon. In the Northeast, the Numaligarh refinery is being tripled to 9 mtpa. Further, BPCL has achieved financial closure for the Bina refinery-cum-petrochemical project in Madhya Pradesh. Meanwhile, the long-delayed West Coast Refinery (60 mtpa), backed by Aramco and Abu Dhabi National Oil Company, remains under review due to land acquisition hurdles.
Now, refineries are also undertaking digitalisation and petrochemical integration, marking a shift towards sustainability and higher-value products.
Progressing towards cleaner fuels
India’s transition towards cleaner fuels has gained significant momentum in recent years, driven by the twin goals of reducing crude oil imports and cutting carbon emissions. A major initiative in this direction is the rapid expansion of the CGD network. The PNGRB has authorised 307 geographical areas, covering almost 100 per cent of the country’s total geographical area across 733 districts. This expansion is enabling wider access to PNG for households and compressed natural gas (CNG) for transport, offering a cleaner alternative to liquefied petroleum gas and diesel. Building on the momentum, the PNGRB has set an ambitious target to establish 18,336 CNG stations and 126.3 million PNG domestic connections by 2032.
The government is also aggressively promoting compressed biogas under the Sustainable Alternative Towards Affordable Transportation scheme. India has made significant progress in its ethanol blending initiative, achieving the 20 per cent blending target (E20) ahead of schedule. Originally set for 2030 and later advanced to 2025, the goal has already been met during the current ethanol supply year. This achievement not only supports cleaner combustion but also creates a market for surplus sugar and grain, strengthening the rural economy.
Sidra Siddiquie
