IEW 2023: An Opportunity for Oil & Gas Industry to Delve in India’s Energy Transition

Most of the major economies are riding on the wave of the green energy transition with aims to achieve carbon neutrality around the mid of this century. India also aims to achieve a net-zero target by a deadline of 2070, balancing sustainability needs and developmental aspirations.

In any case, renewable energy industries are now seeing more support than ever - both in terms of finance and national policies. It is intriguing to guess what will be the role and significance of the Oil & Gas industry in this must needed energy transition phase of the Indian energy sector.

India Energy Week 2023
India Energy Week (IEW) 2023 is the first major event under India’s G20 Presidency, taking place between 6 – 8 February 2023 at the Bangalore International Exhibition Centre (BIEC). The event is being held under the patronage of the Ministry of Petroleum & Natural Gas, Government of India, and sees participation from all the Public Sector Undertakings (PSUs), and is officially supported by Indian Oil Corporation Limited (IOCL) and the Federation of Indian Petroleum Industry (FIPI).

Embodying India’s energy transition and with a view of connecting the global energy community for innovation, ideas, and investment on the road to net-zero, the event will bring together 30,000+ global energy leaders, 8,000+ conference delegates, 1,000+ exhibitors, and 500+ renowned speakers from 150+ countries.

The umbrella event will host and deliberate on the perspectives of stakeholders belonging to a wide spectrum including energy producers, integrated energy companies, service providers, EPC contractors, technology companies, financial organizations, and utility and power generation companies from across the oil, gas, alternative and renewable value chain.

The event comes at a critical time when the twin aspects of energy security and environmental sustainability are posing challenges to the long-term energy transition of India, and its path toward decarbonisation.

Contribution of O&G Industry to Green Transition
Apart from various government policies driving the green transition in the country, major oil and gas players are also taking measures to contribute in this transition.

The top oil explorer Oil and Natural Gas Corporation (ONGC) and its partners decided to invest $6.2 billion (Rs 50,000 crore) in green energy projects last year to produce carbon-free hydrogen and green ammonia as part of an ambitious decarbonization drive. ONGC signed a pact with the renewable energy company Greenko to form a 50:50 joint venture for green energy projects. The JV will set up 5.5-7 GW of solar and wind power projects. Aiding India’s target of producing 5 million tonnes of green hydrogen per annum by 2030, the renewable plants will help produce green electricity to power the production of 0.18 million tonnes of green hydrogen per annum.

Another O&G major HPCL ventured into Wind Power generation in 2007 with the installation of a Wind Farm in Dhule, Maharashtra. Since then, the firm increased the capacity of Wind Power to over 100 MW and Solar Power to about 43 MW. Oil India Limited (OIL) has also contributed to green transition through wind and solar projects, establishing renewable energy projects of over 188 MW - about 174 MW Wind and 14 MW Solar energy projects.

The state-owned oil marketing firm Bharat Petroleum Corporation (BPCL) planned a Rs 1.4 trillion investment in the next five years in six strategic areas, including gas, renewables, and e-mobility. Moreover, BPCL also plans to increase its renewable energy capacity to 1 GW by 2025 and 10 GW by 2040, in line with its aim to become a net-zero company by 2040.

Private firms are also at the forefront of this transition with the likes of Adani Group and Reliance industries pushing for the renewable sector. While the Adani Group plans to invest over $50 billion in green hydrogen and associated ecosystems for a capacity of up to 3 million tons of green hydrogen annually, Reliance aims to achieve carbon neutrality by 2035 and is investing over USD 10 billion (Rs 75,000 crore) in renewables.

Significance of the Oil & Gas Industry for India
While the age of green energy is inevitable, the importance of O&G cannot be undermined either. The oil and gas sector plays a vital role in influencing decision-making for all the other important sections of the economy as it is among the eight core industries in India. The South Asian country relies on oil and gas for a considerable part of its economy. In terms of energy security, India currently imports most of its crude oil and gas needs. However, the country exports refined oil products such as ultra-low sulfur diesel and jet fuel, notably to Europe and sometimes the US Atlantic Coast.

India is the third-largest energy and oil consumer in the world, and the fourth-largest importer of liquefied natural gas (LNG). India consumed over 204 million metric tonnes (MMT) of petroleum products and roughly 70 billion cubic meters (BCM) of natural gas in FY 2021-22 - a growth of 5.1 per cent and 5 per cent over FY 2020-21. The country’s demand for oil is projected to rise by around 50 per cent to about 7.2 million barrels per day (MBD) in 2030 from 4.8 MBD in 2019 as against a global expansion of 7 per cent. Furthermore, the natural gas demand is projected to double to 133 BCM in 2030 from 64 BCM in 2019 as against just a 12 per cent rise in global gas demand.

To provide for the rising domestic fuel demand as well as cater to the export market, the country is planning to almost double its oil refining capacity to 450 MT in the next 10 years.

Evidently, India is heavily dependent on its Oil and Gas industry. Indeed, the country is one of the largest economies in the world. However, it still has a low per-capita income. Any shortage of energy would be catastrophic for the country’s developmental needs.

Current Stats
As of April 2022, India’s refining capacity was over 250 million metric tonnes per annum. The country had 23 refineries - 19 under the public sector, 3 under the private sector and 1 in a joint venture. Indian Oil Corporation (IOC) is the largest domestic refiner with a capacity of 80.6 MMTPA. Bharat Petroleum Corporation (BPCL) and Reliance Industries (RIL) round off the top three companies.

Petroleum products are essential both for the domestic market as well as exports. The production of petroleum products in the country stood at 254.3 MMT in the year 2021-22, while the exports value of petroleum products registered a growth of over 50 per cent in the period April-December 2022 compared to the same time a year earlier, rising from $46.19 bn to $70.28 bn.

Under One Nation One Gas Grid, India targets increasing the natural gas pipeline coverage by ~60% by 34,500 km by 2024-25, to connect all states by a trunk national pipeline network by 2027.

A combination of public and private efforts in the Oil & Gas sector will be essential for realising national goals of sustainable development of India’s energy sector. The private companies, state-owned PSUs, and government policies have to work in tandem to realise the potential of India’s renewable sector for a green transition. The oil and Gas industry can benefit and get benefitted from this new dimension. India Energy Week 2023 provides a perfect platform for Indian stakeholders in the industry to collaborate with global players for a swift transition to green energy in the interest of all.

- India Energy Week