India’s oil and gas sector continues to play a critical role in meeting the country’s growing energy requirements. With the continued expansion of economic activity, energy demand is expected to rise, underscoring the need for a secure, reliable and diversified energy mix. On these lines, India is striving to balance rising energy needs with its transition towards cleaner and more sustainable energy sources. India is also working towards greater energy independence, with efforts to strengthen domestic capabilities and reduce import dependence.
Geopolitical headwinds and policy responses
On a global level, the oil and gas sector is impacted by uncertainties from geopolitical situations, changing trade dynamics and the resultant fluctuations in oil prices. Recent geopolitical situations that unfurled in the Middle East and disruptions around the Strait of Hormuz have been key events that have shaped the oil and gas sector in India in the recent past. The resultant supply chain disruptions and price fluctuations have impacted the sector in India, which is heavily dependent on imports to meet crude oil and natural gas demands. Such events have highlighted the need for India to lower its import dependence, diversify sources and strengthen domestic capabilities. In line with this, the government undertook a series of measures to deal with the situation and safeguard the sector against adverse shocks in prices and supplies.
Prior to the crisis, India imported around 60 per cent of liquified petroleum gas (LPG) consumption, of which around 90 per cent passed through the Strait of Hormuz. In response, several measures were undertaken to ensure stability in LPG. LPG production levels were raised from 34 thousand metric tonnes a day to 54 thousand metric tonnes a day. Moreover, import sources were diversified and supply for households was prioritised. Importantly, the government issued orders for the prioritisation of C3-C4 streams for LPG production and diverting them from other sectors. As of June 2026, all sectoral restrictions on the supply of non-domestic packed LPG have been removed, and supplies have been restored to levels prevailing prior to the crisis, following an improvement in the LPG situation.
Against this backdrop, piped natural gas (PNG) has emerged as an increasingly important element. In March 2026, the government notified the Natural Gas (Supply Regulation) Order, 2026, to prioritise the allocation of natural gas to sectors such as domestic PNG and compressed natural gas (CNG) for transport. These measures were later withdrawn with the improvement in supplies.
Measures were also undertaken to tackle key bottlenecks hindering the expansion of pipeline infrastructure. The government notified a comprehensive control order to put forth a streamlined and time-bound framework for laying and expanding pipeline infrastructure across the country. The move was targeted towards addressing delays in approvals, permissions and right-of-way challenges, and enabling faster development of natural gas infrastructure, including in residential areas.
Other key measures adopted include a reduction in excise duties on both petrol and diesel and measures to curb bulk hoarding and unfair practices, among others.
Policy measures strengthen sectoral progress
Key policy and regulatory measures over the years have been directed towards increasing domestic crude oil and natural gas production, strengthening domestic capabilities and energy security, and reducing import dependence. Some of these include the Oilfields (Regulation and Development) Amendment Act, 2025, moving from production sharing contracts to revenue sharing contracts, investments in the acquisition of seismic data, and increasing the exploratory drilling of wells. Further, the Petroleum and Natural Gas Rules, 2025, were recently amended to offer ease of doing business and operations. Additionally, the Petroleum and Natural Gas Regulatory Board (PNGRB) rationalised the unified tariff, reducing the number of tariff zones from three to two, with effect from April 1, 2026, for domestic PNG and CNG for transport. The move was aimed at addressing high transport charges associated with long-distance natural gas deliveries.
E&P expanding domestic capabilities
India’s import dependency on crude oil on a consumption basis stands at approximately 89 per cent. This has underscored the need to reduce external dependence and strengthen domestic production. In line with this, the country has seen notable initiatives in exploration and production (E&P) in the recent past. On the regulatory front, the government rationalised royalty rates and methodologies for crude oil, natural gas and casing head condensates. The initiative seeks to reduce costs associated with domestic exploration and production, remove inconsistencies, and ensure a stable and predictable framework that is also aligned with investors. Further, milestones in discoveries and spudding activities highlight notable efforts towards enhancing indigenisation in the sector, strengthening drilling capacity and moving towards greater self-reliance in energy.
Oil India Limited reported the presence of natural gas in the second and third exploratory wells in the Andaman Shallow Offshore Block AN-OSHP-2018/1 under the Open Acreage Licensing Policy. Vijayapuram 2 well’s occurrence was reported 17 km from the shoreline on the east coast of the Andaman Islands, at a water depth of 295 metres and target depth of 2,650 metres. Meanwhile, Vijayapuram-3 was drilled 15 km off the east coast of the Andaman Islands at a water depth of 355 metres, and natural gas presence was established following the initial production testing of the well at a 1,900 metres depth in the Eocene formation. Oil India also announced a gas discovery at the nominated Dandewala Field in Rajasthan, marking the first successful establishment of gas presence in the shallower Sanu Formation. The well produced around 25,000 standard cubic metres per day (scmd) of natural gas from a depth of approximately 950 metres. Oil India also commenced an offshore drilling campaign at the Kerala-Konkan Basin by spudding the first well.
Discoveries were also recorded in other fields. Cairn Oil and Gas notified a hydrocarbon gas discovery in the appraisal well Ambe-2A on the west coast at reservoirs located below the main gas field within the Miocene-Tarkeshwar formation. Cairn was awarded the Ambe block, spread across 728.19 square km, under the Discovered Small Field-III bidding round. Moreover, Asian Energy Services Limited announced a new oil discovery at the onshore Mevad field in Gujarat, on well NM-01, following drilling to a depth of 1,650 metres. Hydrocarbon-bearing sand intervals were found at Mandhali, Sobhasan and Kalol.
In the case of existing fields, Oil and Natural Gas Corporation Limited (ONGC) achieved the monetisation of the Daman Upside Development Project in the Arabian Sea in March 2026, through the flow of gas from Platform B-12-24P. More recently, it spudded its exploratory well, MN-DW18-1-H-D, in the Mahanadi Offshore Basin in July 2026, marking a key milestone under the Samudra Manthan Campaign. Investments in drilling capabilities and greater industry collaboration are supporting these initiatives. In January 2026, ONGC signed an agreement with Reliance Industries Limited for resource sharing in deepwater offshore E&P operations on the East Coast of India, particularly across the Krishna Godavari basin and the Andaman offshore. Indian Oil Corporation Limited (IOCL) commenced the first domestic production from Jyoti-1 well in Block CB-ONN-2005/9 at the IUVL site in Gujarat in November 2025. Drillmec International Private Limited also witnessed notable developments, with the spudding of a new generation land drilling rig at Moran in Assam for Oil India. Operations commenced targeting an initial depth of 3,500 metres, while the advanced rig has been designed with the capacity to drill up to 6,000 metres. It also announced the inauguration of Rig NG-1500-7 and the spudding of a development well at ONGC’s Bantumilli site in the Rajahmundry Asset.
Advancements in the midstream segment
The midstream segment is currently witnessing notable expansion, driven by the rise in energy demand and requirements pushing for the strengthening of the country’s energy infrastructure. A strong focus has been placed on improving the utilisation rates of existing LNG terminals, expanding the natural gas pipeline and works on refineries.
Bharath Petroleum Corporation Limited commissioned the 425 km Krishnapatnam-Hyderabad Multiproduct pipeline in February 2026, with the pumping of the first high-speed diesel parcel from the Krishnapatnam coastal installation. Oil India’s Numaligarh-Siliguri product pipeline was augmented to handle a capacity of 5.5 million metric tonnes per annum (mmtpa), up from the initially designed capacity of 1.72 mmtpa. The 406 mm (16-inch) diameter cross-country multi-product pipeline spans 654 km.
Further, IOCL witnessed the inauguration of the Malkapur Terminal in Hyderabad, Telangana. The pipeline-fed terminal is expected to lead to an annual reduction in logistics cost by approximately Rs 2.9 billion, while also cutting down on carbon dioxide emissions by around 27,000 metric tonnes a year.
More importantly, Hindustan Petroleum Corporation Limited’s (HPCL) Rajasthan Refinery at Pachpadra in Balotra was inaugurated in July 2026. The greenfield refinery-cum-petrochemical complex has a capacity of 9 mmtpa, and a petrochemical capacity of 2.4 mmtpa.
Continued focus on LNG and pipelines
India currently has eight LNG terminals with a total capacity of 53.5 mmtpa as of July 1, 2026. However, capacity utilisation across these terminals varies notably, ranging from 9 per cent at HPCL’s terminal at Chhara to over 90 per cent at Petronet’s Dahej terminal. On the pipeline front, the total authorised natural gas pipeline length stands at 34,803 km, with the operational length standing at 27,905 km as of March 2026.
Key developments in the recent past include the inauguration of Phase I of the North East Gas Grid (NEGG) of Indradhanush Gas Grid Limited (IGGL), spanning around 553 km, and the inauguration of the Srikakulam-Angul Natural Gas Pipeline of GAIL (India) Limited in October 2025, stretching across around 124 km in Andhra Pradesh and 298 km in Odisha. Further, IGGL commenced the supply of natural gas to Numaligarh Refinery Limited through the Guwahati-Numaligarh Pipeline, marking the commencement of commercial operations on the NEGG.
Further, PNGRB has granted authorisation to IOCL for laying, building, operating and expanding the Kochi-Kanyakumari-Thoothukudi natural gas pipeline, spanning approximately 425 km and having a system capacity of 6.84 million standard cubic metres per day, including the common carrier capacity.
Strengthening the CGD network
The city gas distribution (CGD) segment is emerging as a key component of India’s transition towards a gas-based economy. The segment continues to see an expansion of its reach and consumer base. The PNGRB has completed the 12/12A bidding round and has authorised entities for the development of CGD networks in 309 geographical areas (GAs), covering 683 districts. As of May 2026, India has achieved more than 17 million domestic PNG connections and over 8,900 CNG stations.
Amid ongoing challenges in LPG and efforts to reduce dependence on conventional fuels, PNG has gained renewed focus as a cleaner, safer and more convenient energy source for households. On these lines, the PNG Drive 2.0, implemented from January 1, 2026, to June 30, 2026, was aimed at accelerating the adoption of PNG, converting connected households to billed customers, improving the utilisation of CGD infrastructure and strengthening India’s clean energy transition. The outcomes highlight efforts towards the move to cleaner, safer and more convenient household energy, and reduce the dependence on conventional fuels.
Moreover, the transition has also been supported by state-level initiatives such as targeted CGD policies in Odisha and Chhattisgarh. On the national level, the Indian government notified the Liquefied Petroleum Gas (LPG) (Regulation of Supply and Distribution) Amendment Order, 2026, in May 2026. As per the provisions, LPG consumers who also have PNG connections are required to terminate their LPG connection within 30 days of obtaining the PNG connection.
As CGD networks mature, the sector is increasingly placing emphasis on improving consumer confidence, enhancing network utilisation and integrating advanced technologies to strengthen operational efficiency.
Moving towards cleaner fuels
India’s move towards cleaner fuels is driving notable initiatives in segments including CBG, sustainable aviation fuel and ethanol. In the CBG segment, the inauguration of several plants and a growing pipeline of planned projects are supported by efforts to strengthen market access and integrate CBG into existing gas infrastructure. The PNGRB approved guidelines for the injection of CBG into the natural gas pipelines and CGD networks. The guidelines cover areas including CBG quality analysers, calibration practices and safety instrumentation. Moreover, the expansion of the scope of the CBG-CGD synchronisation scheme to include the injection of CBG into the gas pipeline network, and its extension until December 31, 2047, is expected to further support long-term investment and scaling. Efforts are also being complemented through state-level initiatives, such as policies in Maharashtra and Chhattisgarh.
Challenges remain
Apart from high import dependence, supply chain risks and price volatility, several challenges continue to hinder efficient operations in the sector. The adoption of natural gas requires affordability to ensure expansion. The adoption of advanced technologies is hindered by initial resistance and constraints in the availability of skilled labour. On the CGD front, some of the key challenges are delays in last-mile connectivity and material shortages. Moreover, despite its significant expansion, CGD continues to face implementation gaps, last-mile connectivity, customer conversion challenges and the need to improve the commercial viability of networks in newly authorised areas. It therefore becomes critical to address these challenges in order to expand CGD infrastructure and support India’s broader transition towards a cleaner and more diversified energy mix.
In sum
Looking ahead, the oil and gas sector in India is expected to be driven by imperatives of meeting the rising energy demands and aligning the expansion towards more domestically and sustainably sourced inputs. With demand in India projected to witness a notable growth, strengthening energy security and expanding domestic energy capabilities are key requirements.
Moreover, Indian Strategic Petroleum Reserve Limited is working towards the creation of strategic petroleum reserve facilities. Phase I saw the creation of 5.33 million metric tonnes (mmt) of crude oil capacity across Vishakhapatnam, Mangaluru and Padur. Phase II of this notable initiative will feature a capacity of 6.5 mmt across Odisha and Karnataka. Importantly, this phase is likely to be carried out via a public-private partnership model with viability gap funding from the government capped at 60 per cent of the project cost.
On these lines, India’s efforts to diversify sources, strengthen strategic reserves and expand the adoption of cleaner fuels are significant steps.
