The Year 2017 for Vedanta Cairn Oil and Gas
New Delhi, India: Oil and gas industry has seen steady year on year growth every year in last one decade. The year gone by is not an exception as well. As the growing demand suggests that India's oil demand is expected to grow at a CAGR of 3.6 per cent to 458 Million Tonnes of Oil Equivalent (MTOE) by 2040, while demand for energy will more than double by 2040 as economy will grow to more than five times its current size. According to Boston Consulting Group report Indian Government take from domestic oil production is the highest in the world, despite India being an oil-importing country. Gas production will likely touch 90 Billion Cubic Metres (BCM) by 2040, subject to adjustment to the current formula that determines the price paid to domestic producers, while demand for natural gas will grow at a CAGR of 4.6 per cent to touch 149 MTOE.

India's domestic oil and gas production touched a five year low in 2016-2017 dropping more than 20 per cent to 68 million tonne. The country’s import dependence for crude shot up to a five year-high of 83.4 per cent, data from the oil ministry's arm Petroleum Planning and Analysis Cell (PPAC) showed. Total domestic oil and gas production in 2016-2017 stood at 67.9 million Tonne of Oil Equivalent (MTOE) as compared to 85.7 MMTOE in 2011-2012. However, during the same five year period, the country's oil and gas production from international assets grew more than 84 percent to 16.2 MTOE in 2016-2017. Looking at this trend, the year gone by does not seem to be a boost to India's planning towards the vision of energy security.

Oil and Natural Gas Corporation (ONGC) announced its plans to invest USD 11 billion in exploration and development of blocks in the Krishna Godavari (KG) basin, which is expected to increase gas production by around 30 per cent over the next three-four years.

Indian Oil Corporation Limited (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have signed an agreement to build an integrated refinery-cum-petrochemicals complexes, which would have a capacity of 60 million metric tonnes per annum (MMTPA) and cost approximately US$ 40 billion. The refinery is expected to commence operations by 2022.

BPCL plans to invest Rs 1.08 trillion (USD 16.88 billion) over the coming five years for expansion of operations across business segments, of which the company plans to invest Rs 45,000 crore (USD 7.03 billion) in the petrochemicals segment.

The total investment by oil marketing companies (OMCs) on fuel upgradation programme will reach Rs 90,000 crore (USD 13.95 billion) by 2020, according to Mr. K D Tripathi, Secretary, Ministry of Petroleum and Natural Gas, Government of India.

World's largest oil exporter Saudi Aramco is planning to invest in refineries and petrochemicals in India as it looks to enter into a strategic partnership with the country.

Prime Minister Shri Narendra Modi had set the target to bring down India's import dependence on oil and gas by at least 10 per cent by 2022. If this goal has to be achieved, the government needs to take proactive steps in boosting domestic production and cutting reliance on imports. While the government is committed, the Industry looks forward to some bold steps in 2018.

The cess of 20% of per barrel cost as per current policy is a highly nonconducive operating environment for the producers. The government must look at addressing the issue in the upcoming budget.