India’s oil consumption growing
India’s growing oil consumption (8 per cent year-on-year)and almost stagnant domestic production has resulted in increasing dependence on imports.
To address this and ensure energy security, the Indian government has embarked on a two-pronged strategy of increasing exploration and development of domestic basins (through successful NELP I-VI rounds) as well as acquiring oil equity.
While the country is deficient in crude oil, it is surplus in refining capacity and is a net exporter of petroleum products.
Additional capacities being planned by companies such as IOC, HPCL, Reliance Industries and Essar will further position India as a regional refining hub.
Going forward, gas is expected to emerge as one of the fastestgrowing fuels and will attract significant investor interest. The increasing global interest in the Indian oil and gas sector was evident by the heightened M&A activity.
A study of recent deals in the oil and gas sector by PSUs, private companies, overseas service companies and financial investors indicate increased interest across the oil and gas value chain.
- Reduced customs duty on project imports will boost development of infrastructure in oil and gas sector like pipelines
- Tax holiday withdrawal for refining activities would adversely impact the sector. The government should clarify its position regarding availability of tax holiday on production of natural gas
- Demand for infrastructure status to upstream activities and removal of service tax on exploration services still not considered