The origin of oil & gas industry in India can be traced back to 1867 when oil was struck at Makum near Margherita in Assam. At the time of Independence in 1947, the Oil & Gas industry was controlled by international companies. India's domestic oil production was just 250,000 tonnes per annum and the entire production was from one state - Assam.
The foundation of the Oil & Gas Industry in India was laid by the
Industrial Policy Resolution, 1954, when the government announced that
petroleum would be the core sector industry. In pursuance of the
Industrial Policy Resolution, 1954, Government-owned National Oil
Companies ONGC (Oil & Natural Gas Commission), IOC (Indian Oil
Corporation), and OIL (Oil India Ltd.) were formed. ONGC was formed as a
Directorate in 1955, and became a Commission in 1956. In 1958, Indian
Refineries Ltd, a government company was set up. In 1959, for marketing
of petroleum products, the government set up another company called
Indian Refineries Ltd. In 1964, Indian Refineries Ltd was merged with
Indian Oil Company Ltd. to form Indian Oil Corporation Ltd.
During 1960s, a number of oil and gas-bearing structures were
discovered by ONGC in Gujarat and Assam. Discovery of oil in significant
quantities in Bombay High in February, 1974 opened up new avenues of oil
exploration in offshore areas. During 1970s and till mid 1980s
exploratory efforts by ONGC and OIL India yielded discoveries of oil and
gas in a number of structures in Bassein, Tapti,
Krishna-Godavari-Cauvery basins, Cachar (Assam), Nagaland, and Tripura.
In 1984-85, India achieved a self-sufficiency level of 70% in petroleum
In 1984, Gas Authority of India Ltd. (GAIL) was set up to look after
transportation, processing and marketing of natural gas and natural gas
liquids. GAIL has been instrumental in the laying of a 1700 km-long gas
pipeline (HBJ pipeline) from Hazira in Gujarat to Jagdishpur in Uttar
Pradesh, passing through Rajasthan and Madhya Pradesh.
After Independence, India also made significant additions to its
refining capacity. In the first decade after independence, three coastal
refineries were established by multinational oil companies operating in
India at that time. These included refineries by Burma Shell, and Esso
Stanvac at Mumbai, and by Caltex at Visakhapatnam. Today, there are a
total of 18 refineries in the country comprising 17 in the Public
Sector, one in the private sector. The 17 Public sector refineries are
located at Guwahati, Barauni, Koyali, Haldia, Mathura, Digboi, Panipat,
Vishakapatnam, Chennai, Nagapatinam, Kochi, Bongaigaon, Numaligarh,
Mangalore, Tatipaka, and two refineries in Mumbai. The private sector
refinery built by Reliance Petroleum Ltd is in Jamnagar. It is the
biggest oil refinery in Asia.
By the end of 1980s, the petroleum sector was in the doldrums. Oil
production had begun to decline whereas there was a steady increase in
consumption and domestic oil production was able to meet only about 35%
of the domestic requirement. The situation was further compounded by the
resource crunch in early 1990s. The Government had no money for the
development of some of the then newly discovered fields (Gandhar, Heera
Phase-II and III, Neelam, Ravva, Panna, Mukta, Tapti, Lakwa Phase-II,
Geleki, Bombay High Final Development schemes etc. This forced the
Government to go for the petroleum sector reforms which had become
inevitable if India had to attract funds and technology from abroad into
the petroleum sector.
The government in order to increase exploration activity, approved the
New Exploration Licensing Policy (NELP) in March 1997 to ensure level
playing field in the upstream sector between private and public sector
companies in all fiscal, financial and contractual matters. This ensured
there was no mandatory state participation through ONGC/OIL nor there
was any carried interest of the government.
To meet its growing petroleum demand, India is investing heavily in oil
fields abroad. India's state-owned oil firms already have stakes in oil
and gas fields in Russia, Sudan, Iraq, Libya, Egypt, Qatar, Ivory Coast,
Australia, Vietnam and Myanmar. Oil and Gas Industry has a vital role to
play in India's energy security and if India has to sustain its high
economic growth rate.
Note: The above information was last updated on 21-07-2007