The oil and gas sector is among the six core industries in India and plays a major role in influencing decision making for all the other important sections of the economy. The first oil deposits in India were discovered in 1889 in the state of Assam. This discovery came on the heels of industrial development. . The first well was completed in 1890 and the Assam Oil Company was established in 1899 to oversee production. At its peak during the Second World War the Digboi oil fields were producing 7,000 barrels per day. The potential applications for oil shifted from domestic to industrial and military usage, this was no longer the case and apart from its small domestic production India was largely ignored in terms of oil diplomacy and even written off by some as hydrocarbon barren.
The years since independence have seen the rapid growth of the upstream and downstream oil sectors. The industry has come a long way since then. There has been optimal use of resources for exploration activities and increasing refining capacity as well as the creation of a vast marketing infrastructure and a pool of highly trained and skilled manpower. Indigenous crude production has risen to 37.862 MMT in 2012-13. Natural gas production has increased from 32.202 BCM in 2005-06 to 40.679 BCM in 2012-13, an installed domestic refining capacity of 215.066 Metric Million Tons Per year as on 01.04.2013 with twenty two refineries and a network of 38401 kms of crude oil, natural gas and product pipelines in India. The sector in recent years has been characterized by rising consumption of oil products, declining crude production and low reserve accretion. India remains one of the least-explored countries in the world, with a well density among the lowest in the world. With demand for over 150 million tons India is the fourth largest oil consumption zone, even though on a per capita basis the consumption is a mere 0.6 measured in tons of oil equivalent per head, amongst the lowest in the world- this makes the prospects of the Indian Oil industry even more exciting. During Financial Year 2013–14, the total consumption of petroleum products in India was 158.2 million tons. The consumption stood at 14.2 MT in March 2014, according to data released by the Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas.
The Government of India along with Make in India has adopted several policies to fulfil the increasing demand. The government has allowed 100 per cent foreign direct investment in many segments of the sector, including natural gas, petroleum products, and refineries, among others. Today, it attracts both domestic and foreign investment, as attested by the presence of Reliance Industries Ltd and Cairn India. By 2015-16, India’s demand for gas is set to touch 124 MTPA against a domestic supply of 33 MTPA and higher imports of 47.2 MTPA, leaving a shortage of 44 MTPA, as per projections by the Petroleum and Natural Gas Ministry of India. Moreover, Business Monitor International (BMI) predicts that India will account for 12.4 per cent of Asia-Pacific regional oil demand by 2015.
With more than a billion people, a structural demographic shift resulting in exploding consumption expenditure, full deregulation of a market growing at twice world averages, India represents one of the most exciting oil markets in the world