The oil and gas sector in India continues to serve as a key pillar of the country’s energy landscape, supported by growing demand, expanding infrastructure, and favourable regulatory and policy reforms introduced over the past year. More recently, geopolitical tensions and supply chain disruptions have renewed efforts to strengthen energy resilience, reduce import dependence and diversify energy sources. There is also growing pressure to transition towards more sustainable energy sources. The sector is, therefore, balancing rising energy demand with efforts to strengthen domestic capabilities and accelerate the adoption of low-carbon alternatives.
Energy security gains centre stage amid geopolitical disruptions
The oil and gas sector is characterised by a dependence on external sources to meet the country’s growing energy demand, making it vulnerable to global disruptions and external shocks. Recent global developments have further deepened this impact. Geopolitical tensions in the Middle East and disruptions around the Strait of Hormuz during the early months of 2026 have been key developments, reshaping perspectives on energy security at both the global and domestic levels. Pre-crisis figures indicated that India imports 60 per cent of its liquefied petroleum gas (LPG) consumption, of which around 90 per cent passes through the Strait of Hormuz. The heavy reliance on imports and this concentration left the country exposed to supply chain disruptions and price fluctuations.
However, the country has navigated these challenging times through a series of measures designed to manage supply disruptions and safeguard the sector against price and supply shocks. Recent global events have highlighted the importance of strengthening domestic capabilities and diversifying supply sources. For instance, domestic LPG production was raised from 34 thousand metric tonnes a day to 54 thousand metric tonnes a day. This was accompanied by a range of initiatives to address market volatility while keeping domestic consumer at the centre.
E&P segment gains momentum
The past year has seen renewed momentum in the exploration and production (E&P) segment, marked by new discoveries, increased drilling activity, and progress in developing and monetising key fields. India has significant potential in its offshore basins. Harnessing this requires enhancing production from existing resources while accelerating the exploration of new and prospective resources. Recent developments highlight this positive trajectory, including discoveries by Oil India Limited and Cairn Oil and Gas, progress in existing fields, and new activities by Oil and Natural Gas Corporation Limited. More recently, the approval of the Rs 840.84 billion National Offshore Exploration Scheme, Samudra Manthan, marks a significant policy milestone in the country’s efforts to strengthen E&P activity. The scheme aims to unlock the country’s offshore potential, focusing on exploratory and scientific drilling, infrastructure, data, and de-risking offshore ventures to attract private capital. It is expected to drive over 600 million metric tonnes of oil equivalent of reserves.
Focus on natural gas continues
The government aims to increase the share of natural gas in the country’s energy mix to 15 per cent by 2030. To achieve this, several initiatives are underway, including setting up liquefied natural gas (LNG) terminals, expanding the National Gas Grid pipeline, and scaling up the city gas distribution (CGD) network.
Alongside this, there is a growing focus on improving the utilisation of existing LNG terminals and strengthening pipeline connectivity to emerging demand centres. The country’s eight LNG terminals have a total capacity of 58.5 million metric tonnes per annum, as of August 1, 2026. Capacity utilisation, however, remains uneven, with seven terminals operating at less than 50 per cent during April-June 2026.
The National Gas Grid is also expanding, with the total authorised natural gas pipeline network as of March 2026 at 34,803 km, of which the operational length is 27,905 km. Recent expansions have improved connectivity to previously underserved regions, including parts of the Northeast and southern India, supporting wider availability of natural gas.
On the demand side, CGD is emerging as a primary driver of natural gas consumption. During 2025-26, CGD accounted for around 23 per cent of the total natural gas consumption, making it the second largest consuming segment after fertilisers. However, recent trends show that the CGD sector accounted for the highest share of natural gas consumption at around 30 per cent during April-June 2026.
With the Petroleum and Natural Gas Regulatory Board (PNGRB) having authorised CGD networks across 309 geographical areas (GAs), continued expansion of compressed natural gas (CNG) and piped natural gas (PNG) infrastructure is expected to remain an important driver of natural gas demand.
PNG gains traction
The PNG segment has gained renewed attention over the past year, supported by efforts to expand natural gas access and accelerate India’s clean energy transition. The launch of the PNG drive 2.0 in January 2026 marked a key step in this direction, targeting the expansion of natural gas connectivity and reinforcing its use for cooking and clean transportation. It focuses on expanding natural gas pipeline connectivity across GAs, and PNG connectivity to households, commercial establishments and industries; augmenting CNG infrastructure; and facilitating faster statutory approvals through coordination with state and local authorities. This initiative has improved CGD infrastructure utilisation while contributing to the country’s clean energy transition.
The segment also gained strategic importance amid recent geopolitical tensions. India’s reliance on external sources for LPG exposed its supply chain vulnerability, prompting efforts to stabilise LPG availability while placing greater emphasis on PNG as a reliable, cleaner and convenient alternative for cooking.
Policy and regulatory support have further strengthened the segment. The government implemented measures to accelerate pipeline development by streamlining and fast-tracking approvals, and addressing right-of-way and other implementation challenges. Some measures introduced during the period of heightened LPG supply concerns were subsequently rolled back as conditions improved. Overall, the segment has reinforced its long-term importance in supporting India’s efforts to diversify its energy sources and strengthen domestic energy resilience.
Integration of technology
Digitalisation is emerging as a critical enabler of smarter, data-driven and more efficient operations across the oil and gas value chain. Digital platforms and technologies are increasingly being integrated to enhance asset management, improve operational efficiency, and strengthen operations and maintenance.
Upstream operations are witnessing enhancements with the use of data and digital tools to improve drilling planning and asset monitoring. Further, the use of geographic information systems (GIS), digital twins, and predictive analytics is gaining traction across the value chain. The customer segment is also seeing a transformation with the adoption of smart meters, AI chatbots for assistance and billing, and digital apps and platforms for customer onboarding and management.
Simultaneously, increasing emphasis is being placed on improving data quality to enable more effective AI deployment. Strengthening cybersecurity is also becoming increasingly crucial as digital adoption expands.
Accelerating the integration of cleaner fuels
The rise in demand, accompanied by the need to integrate cleaner fuels and ensure energy security, is driving the adoption of a more diverse energy mix. Compressed biogas (CBG) is making significant headway. The recently approved National Circular Bioenergy Scheme, GOBARdhan, aims to establish CBG as a key pillar of the future energy mix. Further, state-level CBG policies, commissioning of CBG plants and announcements for new ones are expected to drive momentum in the coming years. Further, efforts are underway to inject CBG into natural gas pipelines and CGD networks.
Moreover, the Ethanol Blended Petrol (EBP) programme has gained prominence on the biofuels front. It is supporting energy security through the use of domestic resources, boosting farmer incomes, and lowering greenhouse gas emissions. Meanwhile, the adoption of sustainable aviation fuels are gaining traction across the aviation sector, with various initiatives in early stages. The maritime sector is also exploring alternative fuel options such as green hydrogen, ammonia, biofuels and LNG to transition towards low-carbon operations.
Green hydrogen is emerging as a key clean fuel alternative, especially to decarbonise hard-to-abate sectors. Policy support through the National Green Hydrogen Mission and the Strategic Interventions for Green Hydrogen Transition (SIGHT), along with a growing pipeline of projects, are expected to further accelerate uptake.
Looking ahead
The past year witnessed a range of developments that have reinforced the need for greater energy security and resilience in the oil and gas sector. Geopolitical disruptions have strengthened efforts to diversify supply sources, reduce import dependence and strengthen domestic capabilities. Further, the renewed momentum in the E&P segment, supported by recent policy initiatives, is expected to drive domestic production. The growing adoption of cleaner fuels and alternative energy sources reflects a positive trend, expected to deliver significant benefits in the years to come. At the same time, increasing attention is being directed towards expanding storage capacity and strategic petroleum reserve facilities.
Going forward, energy demand is expected to remain strong, with growing emphasis on building energy security and meeting climate goals. Digital technologies are expected to witness wider integration, further driving efficiency across the value chain.
Shreya Annie Mathew
