The oil and gas sector in India continues to play a key role in meeting the country’s growing energy requirements. As energy demand continues to rise, there is a growing focus on strengthening energy security, enhancing domestic production and accelerating upstream activity. Efforts are also being directed towards expanding oil and gas infrastructure, including pipelines, city gas distribution (CGD) networks, refineries and terminals. The recent period has been shaped by geopolitical disruptions that have affected global energy supply chains. India, however, has navigated these challenges through a combination of policy measures, diversification of supply sources and a greater focus on domestic capabilities. Ensuring adequate supplies for domestic consumers has remained a key priority. Hardeep Singh Puri, Union Minister of Petroleum and Natural Gas, spoke about the sector’s progress and the measures that have helped India navigate the recent crisis with resilience at various industry events. Edited excerpts from his addresses…
For decades, energy security has been perceived largely through the prism of access to hydrocarbons. Today, India has moved beyond that. The country has largely been able to diversify its sources of supply, developed resilient infrastructure, forged trusted partnerships, invested in technological innovation, and built on reserves and alternative fuels. Above all, it has strengthened the ability to protect citizens from external shocks. The energy policy in India has focused on simultaneously achieving three key objectives: availability, affordability and sustainability.
“Despite volatility in global crude and product markets, Indian consumers have been shielded at the retail pump.”
Remaining resilient amid global turmoil
The problems arising as a result of military conflicts and closure of the Strait of Hormuz began in late February 2026. The period prior to this was characterised by periodic threats of closure of the Strait of Hormuz, through which a large percentage of global energy supplies pass. However, the strait had not previously been closed.
When global supply chains face disruptions of 20-30 per cent on important routes and products, no country can remain insulated from the resulting shock. Freight and insurance costs rise, cargoes face delays and countries are forced to make hard choices. In several markets, the disruptions resulted in queues, emergency revisions, concerns over rationing, curtailed retail hours, and odd-even working hours. Several countries have also seen hikes in petrol and diesel prices during the crisis.
However, India remained strong amid these disruptions. While the costs of crude import witnessed a sharp rise and the region faced severe disruptions, the country continued the shielding. India was able to insulate its customers and citizens from this global turmoil.
The government absorbed the shock at the fiscal system level rather than immediately passing the burden on to the consumer. It also ensured that policy responses were not driven by panic.
The key responsibility during the time was ensuring steady supplies. The central and state governments regularly monitored the supply situation for crude, liquefied natural gas (LNG), liquefied petroleum gas (LPG), petrol, diesel and aviation turbine fuel, while also ensuring that supplies to domestic consumers remained adequate.
Over the past four years, despite volatility in global crude and product markets, Indian consumers have been shielded at the retail pump. Moreover, preparations made over the past 10 years came into play exactly when the need arose.
India moved with great speed in response to the crisis. It diversified its sources, increasing its crude sourcing from around 27 countries to 41 countries. LPG was procured from the US, Norway and Algeria apart from the Middle East. Orders were issued to maximise the LPG yield at refineries and domestic production was increased by around 60 per cent from over 34,000 metric tonnes per day to around 54,000 metric tonnes per day.
The total daily consumption of 90,000 metric tonnes was also reduced with the shift from LPG to piped gas. This was accompanied by incentivising the shift to natural gas. Consumption dropped to 80,000 metric tonnes per day, which was also partly attributable to the summer heat. Allocation of natural gas was prioritised and products were retained in Indian markets. Operation Urja Suraksha was a coordinated response across companies, ministries, state governments and international suppliers.
Moreover, when crude prices witnessed a sharp rise, oil marketing companies carried out under-recoveries that would normally have translated into a direct retail increase. Excise duties were cut and export levies were used to keep Indian products in the Indian market.
However, India did face concerns regarding a strain in LPG capacity. Industrial and commercial users faced difficulties, especially in terms of commercial LPG, as domestic consumers were prioritised over commercial and industrial consumers. Household kitchens were prioritised, followed by commercial and industrial LPG under an allocation system. This approach helped ensure adequate supply in households while still providing the industry with a transparent channel to raise genuine requirements.
For commercial and industrial users, a three-member committee of executive directors from Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited was constituted to review allocations to restaurants, hotels, industrial canteens and commercial users. State civil supplies departments and industry associations dealt with this committee directly.
In parallel, the government accelerated the structural shift to PNG and CNG, maintaining 100 per cent allocation throughout.
Beyond import dependence
India’s dependence on imports is often highlighted. However, this presents only part of the picture. India now produces 60 per cent of its LPG requirements and about 50 per cent of the natural gas requirements domestically. The country also stands among the world’s largest refiners and exporters of petroleum products, shipping more than 60 million tonnes a year to global markets.
While India does not extract every molecule it consumes, it increasingly adds value through refining, transportation, storage, marketing and onward shipping. In these layers, which often receive less attention than upstream, is where a notable share of the value across the global energy is created.
Government support continues
India’s fuel retail network expanded from 52,000 outlets in 2014 to well over 0.1 million. The CGD network has expanded from 55 geographical areas (GAs) to 309 GAs. Under the Ujjwala scheme, over 105 million connections have been commissioned.
The recently approved GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme for biogas is expected to aid in scaling up gas production. It provides entrepreneurs support for setting up new plants, among other incentives.
Notable efforts have also been seen in the biofuel blending programme.
Contrary to the global decline, India’s refining capacity is witnessing a rise. It currently stands at around 267 million metric tonnes per annum (mmtpa) and is moving towards 300-310 mmtpa.
India holds 3.5 million square km of sedimentary basins, of which 1 million square km was earlier marked off as a no-go area. This area was opened up in 2022, and a number of bids are now emerging from this area. The Open Acreage Licensing Policy (OALP) Rounds X and XI are also expected to see bids from the area.
The cabinet recently approved Samudra Manthan, a major scheme with an outlay of Rs 840 billion, for deepwater drilling. The government will step in to support the cost of drilling by up to 50 per cent and a maximum Rs 6.75 billion per well, whichever is lower. This is driven by the high costs associated with deepwater drilling.
Deepwater exploration and production require heavy capital expenditure, patience, perseverance and financial support. The drilling is expected to be carried out by private players. From their perspective, the availability of sufficient oil globally raises questions about the reason to invest in India.
To address this, efforts were initially focused on requisitioning their services and leveraging their expertise, particularly in deepwater drilling. The response to these efforts has been very positive. For example, bp is collaborating with Oil and Natural Gas Corporation Limited to rejuvenate the Mumbai High fields, which were originally discovered in 1974.
Fuel prices in India have largely come down over the past four years, owing to the central government’s decision to cut excise duty on fuel on three occasions.
Over a slightly longer period, petrol prices had seen a 4-5 per cent rise. However, when considered alongside the reductions in excise duty on petrol and diesel, India continues to have among the most affordable fuel rates in the world.
The way forward
India has managed to effectively insulate itself from the global turmoil. As supply constraints emerged in some areas, the country was able to secure supplies from alternative sources.
Moreover, its ability to ensure effective supply management was largely supported by the fact that there was no overall shortage of crude in the global market. Schools remained open, factories continued production and transport operated as usual, ensuring uninterrupted economic activity.
With policies in place, there is reasonable confidence in the sector’s ability to address these challenges, while the remaining issues will need to be navigated as they arise
“The energy policy in India has focused on simultaneously achieving three key objectives: availability, affordability and sustainability.”
