India needs Rs 30 lakh cr investment in oil value chain: study

A huge investment of Rs 30 lakh crore is required in the entire hydrocarbon value chain of including coal, oil and natural gas by 2030, according to a recent study jointly undertaken by Ernst & Young and apex chamber The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

These investments will be essential as India is one of the largest energy consumers in the world and the economy is in infrastructure-creation mode, says the study. The per capita energy consumption is very low at present as compared to advanced economies.

The potential of oil and oil equivalent in Indian waters is estimated at 10 billion tonnes – enough to meet all domestic requirements for over a decade. “Hence the need for proactive policy to attract large resources and funds,” said ASSOCHAM secretary general D S Rawat.

Coal, oil and natural gas are major sources with coal accounting for the highest share of its primary energy mix (52.4%). Oil and natural gas account for 31.7% and 10% respectively of the country’s primary energy consumption.

India’s per capita energy consumption – 500 kg of oil equivalent (KGOE) – is still significantly lower than the global average of 1,800 KGOE. “The country’s efforts to reduce demand-supply gap in oil and gas provide significant opportunities in the upstream segment,” said Mr Rawat.

The oil and gas consumption is growing at a compound annual growth rate of 6.5% and equals over 195 million tonnes of oil equivalent (MTOE). Due to global economic recession, energy consumption decreased in many countries as a result of slowed down industrial activities.

The crude oil as percentage of its consumption in India has steadily increased from 79% in 2007-08 to 85% in 2010-11 with annual domestic production stagnating at close to 34 million tonnes.

The country’s natural gas production jumped dramatically by 45% to about 130 million metric standard cubic metres per day (MMSCMD) when Reliance Industries started operations at KG-D6 field. A total of 25 MMSCMD of liquefied natural gas was imported.

Though India has surplus installed refining capacity of 185 million tonnes per annum, Indian companies are aggressively upgrading and further increasing their capacities to produce Euro IV and Euro V compliant fuels which can be exported to the United States and Europe.

India stands a fairly good chance to emerge as a global refining hub as many refineries in developed countries are likely to shut down over the next few years due to environmental pressures, said. “These refinery products provide opportunities for engineering, procurement and construction contractors and equipment providers.”

The country has remarkable potential to discover new oil and gas reserves since a bulk of its sedimentary area is largely unexplored. Industry estimates also suggest 35 to 90 trillion cubic feet of shale gas reserves in Damodar and Cambay basins.