Market Trends of India Oil and Gas Downstream Industry
This section covers the major market trends shaping the India Oil & Gas Downstream Market according to our research experts:
Refineries to Dominate the Market
- The refineries sector has dominated the Indian oil and gas downstream market in recent years and is expected to continue to do so during the forecast period.
- The country's refinery capacity accounted for 5,018 thousand barrels per day in 2021. The refining throughput was 4.9% of the total world's oil refining capacity in 2021. The refinery capacity is expected to increase as various investments in the refinery sector are expected in the near future.
- For instance, in March 2022, The massive refinery project in Maharashtra gained fresh supporters. After a land acquisition dispute stopped development on the 60 million metric tonnes per annum (mmtpa) West Coast Refinery in 2018, competing proposals have now arrived before Nagpur's petroleum and natural gas ministry, in addition to the one from Raigad, near Mumbai. Thus, the completion of projects will increase the country's refining capacity, which, in turn, will drive the oil and gas downstream market in the forecast period.
- Moreover, in August 2022, Indian Oil Corp. granted a contract to Toyo Engineering India Private Ltd, a wholly-owned subsidiary of Toyo Engineering Corporation (Toyo-Japan). Ltd (IOCL) for the Engineering, Procurement, Construction, and Commissioning (EPCC) of a new 2.5 million vacuum distillation unit (VDU) that IOCL plans to build in Vadodara, Gujarat, Western India.
- Owing to several major upcoming projects for capacity expansion and capacity addition, the refineries sector is expected to dominate the market due to the forthcoming projects' expansion and construction of new refineries.
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Growing Oil and Gas Consumption to Drive the Market
- India is a developing country and has witnessed a significant increase in its oil and gas consumption in recent years, due to the rise in the growing world population and an improvement in living standards in developing countries. Even though new and renewable energy sources are gaining popularity around the world, petroleum fuel remains a major energy source.
- Oil consumption in the country grew by over 3.8% in 2021, from 4,701 thousand barrels daily in 2020 to 4,878 thousand barrels daily in 2021. Gas consumption in the country accounted for 62.2 billion cubic meters in 2021, with an annual growth rate of 3.1%.
- The rapid increase in demand for oil and gas is expected to go on during the forecast period and even beyond, fueled by an increased economy, industrial sector, and commercial sector.
- The increasing demand for oil and gas in the country has led to significant investments by private players like Nayara Energy, Reliance Industries Limited, and the proposed investment by Saudi Arabian Oil Co. The share of private players in the country's refining capacity is expected to rise during the forecast period.
- All of the above factors combined are expected to help drive the India oil and gas downstream market during the forecast period.
