Natural gas , commonly referred to as gas, is a gaseous fossil fuel consisting primarily of methane. It is found in oil fields and natural gas fields, and in coal beds. Natural gas is emerging as an important source of commercial energy. The recoverable reserves of natural gas ( 1 April 2001 ) are estimated at 638 billion cubic metres. Production of natural gas in 2000-01 was 29.477 billion cubic metres. Gas Authority of India Limited (GAIL) was incorporated in 1984 for processing, transporting, distributing, and marketing of natural gas. Presently it operates over 4200 km of pipelines in the country and supplies gas to power plants for generation of about 5000 MW of power and to fertilizer sector for production of over 10 million tonnes of urea. It supplies gas to about 500 industrial units located in different parts of the country.

India 's consumption of natural gas has risen faster than any other fuel in recent years. The consumption increased from 0.6 trillion cubic feet (tcf) in 1995 to 0.8 tcf in 1999 and is projected to reach 1.7 tcf in 2005 and 2.7 tcf in 2010. Increased use of natural gas in power generation and fertilizer industry will account for most of the increase. The Indian government is encouraging the construction of gas-fired electric power plants in coastal areas, which can be easily supplied with liquefied natural gas (LNG) by the sea route.

Almost 70 percent of India 's natural gas reserves are found in the Bombay High basin and the state of Gujarat . Current projects include enhancing gas production at the Tapti fields and recovering previously flared gas at the Bombay High oilfield. India is investing heavily in the infrastructure required to support increased use of natural gas, building LNG import terminals and pipelines.

India 's Foreign Investment Promotion Board (FIPB) has approved 12 prospective LNG import terminal projects, but it is unlikely that they will be commissioned on schedule, as their combined capacity would exceed projected demand. The major LNG import terminal projects are promoted by Petronet (government owned), British Gas, Enron, Siemens, Total FinaElf, Shell and Reliance. The Indian government has now frozen approvals of new LNG terminals.

Currently, most of the activities that relate to Natural Gas are under the control of public sector oil companies. ONGC and OIL explore and produce natural gas while GAIL is engaged in storage, transportation and distribution of natural gas. The capacity of GAIL's Hazira - Bijapur - Jagdishpur Pipeline (HBJP), the longest trunk route pipeline, is being enhanced from 18.20 mmscmd to about 33.40 mmscmd at a project cost of $ 500 million. The Ministry of Petroleum & Natural Gas has acknowledged the importance of creation of a pipeline grid and recently approved the setting up of an apex holding company which will co-promote specific pipeline joint ventures to implement discrete sections of the grid.


The search for oil in India began way back in 1866 in Upper Assam . While oil was struck at Digboi in 1889 marking the beginning of oil production in India , discoveries were made in Nahorkatiya and Moran oilfields in the late 1950s and early 60s in the northeastern region. In view of the growing demand of crude oil, the Government formed Oil & Natural Gas Commission (ONGC) in 1956 to boost the exploration of oil and gas in the country. ONGC made the first discovery in 1958 in the Cambay onshore basin in Gujarat . During the 1960s, oil production in the country was confined to only Assam and Gujarat .

The discovery of oil and gas in the offshore region was made by ONGC in 1974 in Mumbai High which opened up a new vista for oil and gas exploration and production in India . Subsequently, more discoveries were made in the Krishna-Godavari, Cauvery and Rajasthan sedimentary basins. While the responsibility of carrying out exploration and production activities in the country was entrusted to the national oil companies (NOCs) almost till the beginning of 1990's, wherein they used to be granted the Petroleum Exploration License (PEL) on nomination basis.

India has 26 sedimentary basins with an area of 3.14 million sq. km. Considering the entire 3.14 million sq km of sedimentary area, onland as also shallow and deep offshore in the country, the resource base of hydrocarbons is estimated to be about 29 billion tonnes of oil and oil equivalent gas (O+OEG). Out of this, only 6.8 billion tonnes of in-place hydrocarbon has so far been established through exploration.

While a considerable area is available in the country for carrying out exploration activities for hydrocarbons, so far as the demand versus domestic availability of crude oil is concerned, India 's position of 63 per cent self-reliance in 1989-90 became 31 per cent in 2000-01. One of the main reasons for a comparatively lower growth in the country's oil production is the absence of major discoveries of hydrocarbon resources in recent years. Thus, there is an urgent need to increase the availability of indigenous crude oil through increased exploration in the country. Over the last 15 years, the demand for petroleum products has risen at an annual compound rate of about 6 per cent. During the last few years, the crude oil production in the country has been at a rate of around 32 million tonnes per annum while the current requirement is of the order of 122 million tonnes. Similarly, the country's natural gas production last year was about 81 million standard cubic meters per day (MMSCMD) as against the projected demand of around 151 MMSCMD in 2001-02. The demand for petroleum products in the country during the current year is about 138 MMT and is expected to be about 179 MMT by the year 2006-07.

Considering the availability of vast unexplored or poorly explored area with substantial yet-to-be-established hydrocarbon resource base and widening gap of demand and supply, the Government of India has felt the need to accelerate the pace of exploration for hydrocarbons in the country. To this effect, the Government has recently come up with ‘ India Hydrocarbon Vision – 2025' wherein the strategic directions were provided towards exploration of the Indian sedimentary basins in a phased manner in keeping with technological advancement and environmental concerns. To achieve the set objectives, the implementation schedule envisages continuance of exploration in producing basins, pursuit of extensive exploration in non-producing and frontier basins, a programme for appraisal of the Indian sedimentary basins to the extent of 25 per cent by 2005, 50 per cent by 2010, 75 per cent by 2015 and 100 per cent by 2025.

In view of the inherent risk of hydrocarbon exploration and the huge financial investment associated with such risky exploration ventures, it has been felt that the efforts of the two upstream NOCs may not be adequate to achieve the set mandate. Hence opening up of the acreages for active exploration by private or joint venture companies, in addition to the efforts of the NOCs, was considered necessary. The acreages offered by the Government under various exploration rounds earlier met with only partial success. The main thrust for acceleration of exploration activities has, however, begun with the introduction of New Exploration Licensing Policy (NELP) by the Government in 1997.

NELP has introduced a level playing field for public as well as private sector players. NOCs are also required to compete with the private and joint venture companies in acquiring exploration acreages in Indian sedimentary basins. Under this policy, all companies would be required to bid for a committed work programme to profit petroleum share expected by the contractor at various levels of pre-tax multiple of investments and percentage of annual production sought to be allocated towards cost recovery. The other main features of the terms offered by the Government inter alia include - no signature, discovery or production bonus by the bidder; income tax holiday for seven years from the start of commercial production, no customs duty on imports required to be payable for petroleum operations, biddable cost recovery limit up to 100 per cent, royalty to be payable by the contractor on ad voleram basis, freedom to the contractor for marketing of oil and gas in the domestic market, fiscal stability provision in the contract and incentive for deepwater exploration with only half of the royalty payable in the initial seven years from the beginning of commercial production. There are certain differences between the earlier rounds of bidding for exploration blocks and NELP. While NOCs were to bear royalty, cess and PEL fees on behalf of private companies in the earlier rounds, companies are now required to bear royalty. Cess and fees have now been exempted under NELP. Under the policy, NOCs are no longer needed to participate as Government nominees. The policy exempts them from payment of customs duty and cess for the blocks offered.

The New Exploration Licensing Policy, a vehicle designed by the Government of India, has so far been successful in accelerating the pace of hydrocarbon exploration in the country. Through this Policy, the Government of India is making a concerted effort to expeditiously explore the inadequately explored and unexplored areas of the country's sedimentary basins.

Latest Discoveries of oil and gas in India

In the last 4 years, the NOCs viz. ONGC and OIL , made 25 significant hydrocarbon discoveries of which 10 are in offshore and 15 onland. Out of 10 offshore discoveries, 6 were made in Kutch & Mumbai Basins , Western Offshore and 4 in K-G Basin , Eastern offshore. All these offshore discoveries were made by ONGC. The Western Offshore discoveries were GK-39-1 (Gas) in Kutch offshore; WO-24-1 (Gas), B-14-2 (Gas), Vasai West (Oil & Gas), Vasai East (Oil) and NMT-2 (Gas) in Mumbai offshore. The Vasai East and Vasai West discoveries are considered to be the major discoveries in Western Offshore. The Eastern Offshore discoveries were KD-1-1 (Gas), GS-KW-1 (Oil & Gas), GS -49-2 (Gas) in K-G shallow waters and G-4-2 (Gas) in K-G deep waters.

Out of the 15 Onland discoveries, 5 discoveries were made by OIL in Upper Assam Shelf and 10 discoveries were made by ONGC in Rajasthan, Cambay, Cauvery, K -G and in Assam Arakan Basins. The discoveries made by OIL were Chandmari-1 (Oil & Gas), Matimekhana-2 (Oil), Baghjan-1 (Oil & Gas), Chabua-6 (Oil) and North Chandmari-1 (Oil & Gas). The discoveries made by ONGC were Chinnewala Tibba-1 (Gas) in Rajasthan Basin, Katpur-1 (Gas) in Cambay; PBS-1-1 (Gas) in Cauvery; SU-1 (Oil), GM-1 (Oil), AK-1 (Gas) and Endumuru-9 (Gas) in K-G; Sonamura (Gas) in Assam-Arakan Fold Belt and Banamali (Oil & Gas), Liapling Gaon-1 (Oil), in Upper Assam Shelf.

Private / JV Companies

In the last 4 years, Pvt/JV companies have made 32 significant hydrocarbon discoveries, both in the NELP and Pre-NELP blocks. These discoveries were made in five major areas: Mahanadi – NEC offshore, Krishna-Godavari offshore, Gulf of Cambay , onland Rajasthan and Cambay Basins . The recent gas discoveries, namely Dhirubhai-9, 10, 11 and 15 made by Reliance India Ltd. (RIL) in shallow offshore block NEC-OSN-97/2 located in Mahanadi – NEC basin have upgraded the category of the basin from Cat.-III to Cat.-II.
In deep-water block KG-DWN-98/2 , Cairn Energy Pty. Ltd. (CEIL ) made three important discoveries: Annapurna , Padmavati and Kanaka Durga. While the first tested gas, the other two tested oil. The consortium of RIL and Niko Resources Ltd. made a spectacular series of gas discoveries in their deepwater block KG-DWN-98/3 through the drilling and testing of Dhirubhai wells 1 to 8 and 16. In fact, the Dhirubhai-1 discovery was the world's largest gas discovery in 2002.

In the Gulf of Cambay block CB-OS/2 , operated by Cairn Energy, five hydrocarbon bearing structures: Lakshmi, Gauri, Ambe, Parvati and CBX-1 were discovered. The Lakshmi field has been on regular gas production at the rate of 3.0 MMSCMD since November, 2002. The gas production from the second field Gauri has also commenced from April, 2004. The rate of gas production from this field is 1.3 MMSCMD. In block CB-ONN-2000/2 of onland Cambay basin, Niko Resources struck natural gas in Well Bheema-1. The NS-A field is on gas production at a rate of 0.14 MMSCMD from May, 2004. Recently, in block CB-ONN-2000/1 , GSPC has discovered oil in PK-2 structure and produced oil @ 120m3 / day during initial testing from Olpad formation (Paleocene).

In the Rajasthan onland block RJ-ON-90/1 in Barmer-Sanchor Sub-basin, Cairn has made a string of oil discoveries viz. Saraswati, Raageshwari, GR-F, Kameshwari, Mangala, N-A, N-C and N-V-1. These discoveries have put Rajasthan firmly on the oil map of India . In fact, Mangala discovery is considered one of the major onland oil discovery since Gandhar field having in-place reserves of 116 MMT.


(i) Oil India Limited (OIL)
Oil India Limited (OIL) is a premier Indian National Oil Company under the administrative control of Ministry of Petroleum and Natural Gas, Govt. of India. OIL is engaged in the business of Exploration, Development and Production of Crude Oil and Natural Gas, Transportation of Crude Oil and Production of LPG ( )

( ii ) Oil and Natural Gas Corporation Limited (ONGC)
The crown jewel of India 's oil and gas assets, state-owned Oil & Natural Gas Corporation (ONGC) is India 's largest exploration and production company. It is also the country's largest multinational corporation. In a country reliant on imported fuels, ONGC, which has produced 685 million metric tons of crude and 375 billion cu. meters of natural gas from 115 fields, accounts for the bulk of domestic supply. Subsidiary ONGC Videsh has established exploration activities abroad. ONGC operates an 11,000-km pipeline network and owns nearly 72% of Mangalore Refinery & Petrochemicals Ltd. (MRPL). It also has a joint venture with Mittal Steel, ONGC Mittal Energy. India 's government owns nearly 84% of ONGC

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