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One of India's eight core industries, the oil and gas sector has a significant impact on other major economic segments. Rapid economic growth is driving higher industrial output and transport needs, increasing oil demand. According to the IEA (India Energy Outlook 2021), primary energy demand is expected to nearly double to 1,123 million tonnes of oil equivalent by 2040, as GDP is projected to reach US$ 8.6 trillion.

India is the world’s third-largest consumer of oil and the fourth-largest crude oil refiner. The country hosts the world’s largest oil refinery, the Jamnagar Refinery in Gujarat, owned by Reliance Industries Limited. As of FY25, India’s total refining capacity stood at 258.1 MMT, up from 256.8 MMT in FY24, with private companies accounting for 35% of total capacity. IOCL is the largest domestic refiner at 70.1 MMT, making it the second-largest refiner in Asia. Refining capacity is projected to expand to 309.5 MMT by 2028 and could reach 450-500 MMT by 2030, adding 1 million barrels per day of capacity by 2028.

Domestic consumption of petroleum products in FY25 was 239.2 MMT. Exports reached 64.7 MMT. Crude oil imports rose 4.2% YoY to 242.4 MT, while LNG imports increased 15.4% YoY to 36,699 mmscm. India’s crude oil production rose 3.3% in H1 FY26 to 15.6 MMT, and natural gas output grew 6.4%, while overall energy demand and fuel consumption continued to rise. In April 2025, India produced 2.3 MMT of crude oil, with public sector undertakings accounting for 78% of production. As of January 2025, India’s reserves included 651.8 MMT of crude oil and 1,138.6 BCM of natural gas.

Natural gas demand is projected to grow by nearly 60% to 297 mmscmd by 2030, up from 188 mmscmd in FY24. The share of gas in the energy mix is expected to rise from 6% to 15% by 2030. LNG terminal capacities are expanding, such as the upgrade at Dabhol from 5 to 6.3 MTPA. City gas companies are supporting downstream growth with new CNG stations, PNG connections, and CBG projects. By 2034, India aims for 126.3 million PNG connections and 18,336 CNG stations.

India’s oil demand is projected at 5.74 million barrels per day in 2025 and 5.99 million barrels per day in 2026, according to OPEC. Industrial users are expected to account for 40% of natural gas demand growth, alongside residential, transport, and energy sectors.

Policy reforms and investments are shaping the sector’s future. India is enhancing energy security through upstream reforms, diversified crude sourcing, and strategic reserves. The Union Budget FY26 allocated Rs. 5,597 crore (US$ 640.46 million) for phase II of the Indian Strategic Petroleum Reserves Ltd project to expand underground petroleum storage. The government also plans to commercialize 50% of its strategic petroleum reserves to fund additional capacity. By 2035, planned investments in the oil and gas sector are estimated at Rs. 30,00,000-35,00,000 crore (US$ 348-406 billion). India plans a capex push of Rs. 3,28,227 crore (US$ 37 billion) to transform itself into a petrochemicals powerhouse by 2030, aiming to supply as much as one-third of global capacity additions.

Sustainability initiatives are advancing alongside conventional development. Ethanol blending is set to increase to 20% by 2025, and India plans to invest Rs. 7.5 lakh crore (US$ 102.49 billion) in oil and gas infrastructure over the next five years. Green hydrogen and sustainable aviation fuel projects are underway, including a partnership between AM Green and DP World to develop storage and logistics facilities for 2 million tonnes of green fuel annually.

Exploration activity remains active under the New Exploration Licensing Policy and Open Acreage Licensing Policy. Before 2014, nine NELP bid rounds attracted Rs. 3,07,368 crore (US$ 36 billion), resulting in 177 oil and gas discoveries. In February 2025, the 10th OALP round was launched, offering 25 blocks covering 1,91,986 sq. km. ONGC initiated over 45 exploration and development wells in early 2025.

Strategic partnerships are strengthening the sector. Saudi Aramco is in discussions with BPCL and ONGC to set up two 9 MTPA refineries valued at Rs. 18,000 crore (US$ 2.09 billion). Petrobras signed agreements to supply crude oil to BPCL and collaborate with ONGC Videsh and Oil India for exploration. BPCL and Microsoft are collaborating on digital transformation, while India and the US are expanding cooperation under the Strategic Clean Energy Partnership.

According to DPIIT, FDI inflows in India’s petroleum and natural gas sector stood at Rs. 43,929.63 crore (US$ 8.22 billion) between April 2000-June 2025. The Petroleum and Natural Gas Regulatory Board introduced a Unified Tariff framework to expand the natural gas pipeline network by 10,805 km under the “One Nation, One Grid, One Tariff” initiative.

India’s oil and gas industry is at a pivotal stage. With growing domestic demand, expanding refining and gas infrastructure, accelerated green fuel initiatives, and strong policy support, the sector is positioned to remain a cornerstone of India’s energy security and economic growth over the next decade.

References: Media Reports, Press Releases, Press Information Bureau, Ministry of Petroleum and Natural Gas, Petroleum Planning and Analysis Cell, News Articles, International Energy Agency, BP Statistical Review 2020

Notes: MMTPA - Million Metric Tonnes Per Annum, LNG - Liquefied Natural Gas, MMSCM - Million Metric Standard Cubic Meters, BCM - Billion Cubic Meters, MCMPD - Million Cubic Metres Per Day