India's growing economy has put energy security on top of the government's agenda. Increasing pressure of population and expanding use of energy in different sectors of the economy has led to a rethink on diversifying sources of energy and achieving energy efficiency. With a targeted GDP growth rate of 8 percent during the Tenth Five-year Plan, energy demand is expected to grow at 5.2 percent. It is against this surging demand for energy that India signed a landmark civil nuclear deal with the US in 2008 that is expected to increase the share of atomic power in the overall energy calculus of India.

The oil and gas industry has been instrumental in fuelling the rapid growth of the Indian economy. The petroleum and natural gas sector which includes transportation, refining and marketing of petroleum products and gas constitutes over 15 per cent of the GDP.

Driven by the rising population, expanding economy, and a quest for improved quality of life, demand for oil and gas is likely to increase from 176.40 million tonnes of oil equivalent (mmtoe) in 2007-08 to 233.58 mmtoe in 2011-12, as per the Ministry of Petroleum. Domestic production of crude oil has increased to 34.11 MT in 2007-08 from 33.98 MT in 2006-07. The production of petroleum products went up to 144.93 MT in 2007-08, from 135.26 MT in 2006-07. The production of natural gas went up to 32.27 billion cubic metres tonnes (BCM) in 2007-08, from 31.74 BCM in 2006-07. The projected production of crude oil during the 11th Five-Year Plan (2007-2012) is 206.76 MMT, while that of natural gas is 255.27 BCM.

Production of gas from Reliance Industries' eastern offshore KG D-6 fields, with a life of 11 years, started on April 1 and will increase to 80 million standard cubic metres per day (MSCMD) by the end of the year. Production will help save US$ 9 billion in oil import.

Increase in automobile sales has led to significant investments being made to develop and expand the petroleum retail market. According to US-based consultancy Keystone, automobile sales are likely to grow to about 20 million a year by 2030 (from the present 1 million), making India the third largest automobile market in the world.

While it is one of the world’s biggest hydrocarbon importers, India is also emerging as the global hub for oil refining with capital costs lower by 25 to 50 per cent over other Asian countries.

Petroleum exports have also emerged as the single largest foreign exchange earner, accounting for 17.24 per cent of the total exports in 2007-08. Growth continued in 2008-09 with the export of petroleum products touching US$ 18.34 billion during April-September 2008.

Already, the fifth largest country in the world in terms of refining capacity, with a share of 3 per cent of the global capacity, India is likely to boost its refining capacity by 45 per cent or 65.3 million tonne per annum (mtpa) over the next five years, according to a Deutsche Bank report. Indian companies plan to increase their refining capacity to 242 mtpa by 2011-12 from about 149 mtpa in 2007.

According to a recent CII-KPMG report, India's energy sector will provide investment avenues worth US$ 120 billion-US$ 150 billion over the next five years. According to the Investment Commission of India, the total opportunity in the oil and gas sector is expected to reach US$ 35 billion to US$ 40 billion by 2012.

This April, India announced auctions for 80 more hydrocarbon assets in the country, including 10 for coal-bed methane, in the largest such exercise under its new policy on oil and gas exploration.

In November 2008, 44 oil and gas exploration blocks were awarded under the seventh round of auction of the New Exploration Licensing Policy (Nelp-VII). The overall number of blocks brought under exploration now exceeds 200.

The government allows 100 per cent foreign direct investment in private refineries through the automatic route and 26 per cent in government-owned refineries.

Further, it permits 100 per cent FDI in petroleum products, exploration, gas pipelines and marketing/retail through the automatic route.

Indian companies, both private and public, have also been scouting the world to look for energy assets, and have already made significant investments in Africa, Russia, Gulf and Latin America

India now ranks third amongst the coal producing countries in the world. Being the most abundant fossil fuel in India till date, it continues to be one of the most important sources for meeting domestic energy needs. It accounts for 55% of the country’s total energy supplies.

The use of coal for electricity generation in India is expected to increase by 2.2% per annum during 2002–25, thus requiring an additional 59 000 MW of coal-fired capacity.

In the area of renewable energy, India having an installed capacity of 9645 MW occupies fifth position in the world at the end of 2008, after USA, Germany, Spain and China with installed capacities of 25,170 MW; 23,900 MW; 16,754 MW and 12,210 respectively.

A total of 26.95 billion units of electricity was generated from wind power projects during the last three years viz., 2005-06 to 2007-08.

Significant achievements have been made, with the establishment of over 13,700 MW grid-interactive renewable power generation capacity, which is about 9% of the total installed capacity in the country.

Of this, about 6795 MW capacity has been added during the 10th Plan, i.e., 2002-07 against the Plan target of 3075 MW. In addition, over 5.5 million off-grid/ decentralized renewable energy systems/ devices, mainly biogas plants and solar photovoltaic lighting systems, have been deployed for provision of basic energy needs of cooking and lighting in rural households.

(Source: India Brand Equity Foundation, India Energy Portal and Ministry of New and Renewable Energy)