Petroleum Products




The Government of India started encouraging energy companies to invest in refineries at the end of the 1990s, thus helping the country to become a net exporter of petroleum products in 2011, despite being a significant importer of crude oil. According to the Petroleum Planning and Analysis Cell, production of petroleum products by refineries and fractionators stood at 242.69 million metric tons (MMT) during FY 2016-17, as compared to 231.22 MMT in the previous fiscal year.


With substantial increase in refining capacity in India, exports of petroleum products have picked up since FY 2005-06, although the slowdown in global economy has affected the exports in recent years. Amidst an increasingly challenging environment of declining prices and rising competition, exports of petroleum products witnessed a sharp decline of (-) 46.15 per cent during FY 2015-16, to reach a level of US$ 30.58 billion from US$ 56.79 billion during the previous year. During 2016-17, however, the exports recorded were 3.66 per cent valuing US$ 31.70 billion. The share of petroleum product exports in total exports has witnessed a consistent increase from 14.56 per cent in FY 2010-11 to 20.09 per cent in FY 2013-14. However, this export share exhibited a decline in the fiscal year FY 2014-15 to touch 18.3 per cent and further to 11.66 and11.48 per cent during FY 2015-16 and FY 2016-17 respectively.

During 2016-17, Singapore was the largest export destination for India’s exports of petroleum products, accounting for 14.99 per cent of the total exports, followed by UAE (12.11 per cent), the USA (5.90 per cent), the Netherlands (4.45 per cent) and Gibraltar (4.06 per cent).

Foreign Direct Investments

Exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products and natural gas, petroleum products’ pipelines, natural gas pipelines, LNG regasification infrastructure, market study, formulation and petroleum refining in private sector, subject to the existing sectoral policy and regulatory framework in the oil marketing sector and the policy of the government or private participation in exploration of oil and the discovered fields of natural oil companies – 100% FDI, automatic route. Petroleum refining by PSU, without disinvestment of dilution of domestic equity in existing PSUs – 49% automatic route. During April 2000 - March 2017, petroleum and natural gas sector received FDI inflows of US$ 6.85 billion.


As per the BP Energy Outlook 2017, growth in energy consumption in 2016 was once again driven by the developing economies. China (1.3%, 47 mtoe (million tonnes of oil equivalent)) and India (5.4%, 39 mtoe) led the way, contributing almost identical increments, and together accounting for a round half of the increase in global demand. India’s energy consumption grew at a similar rate to the recent past, underpinned by solid economic growth.



  • Government has approved Hydrocarbon Exploration and Licensing Policy (HELP) and same has been notified on March 30, 2016. This policy provides a uniform licensing system to explore and produce all hydrocarbons such as oil, gas, coal bed methane, shale oil/gas, etc. under a single licensing framework, option to select the exploration blocks without waiting for formal bid round and also provides many incentives such as reduced royalty rates for offshore blocks, marketing & pricing freedom and easy to administer revenue sharing model.
  • Discovered small Fields Policy announced in March 2016 for monetization of 67 discoveries through international competitive bidding.
  • Under the New Domestic Gas Pricing Policy, a transparent new gas pricing formula linked to global market made effective w.e.f. November 1, 2014.
  • Marketing and pricing freedom for gas produced from geologically difficult, high risk/high cost areas with a provision of ceiling price based on landed cost of alternate fuels announced on March 10, 2016.
  • Policy Framework for relaxation, extensions and clarifications at the development and production stage under PSC regime for early monetization of hydrocarbon discoveries was approved on November 10, 2014.
  • Policy for grant of extension to the Production Sharing Contracts of 28 Small and medium sized discovered blocks was approved on March 10, 2016.
  • Policy on Testing Requirements for discoveries in NELP blocks was approved on April 29, 2015.
  • Hydrocarbon vision 2030 for North East India has been released in February, 2016.
  • Pooling of gas in Fertilizer (Urea) sector was approved on March 31, 2015 for supply of gas at uniform delivered price to all fertilizer plants on the gas grid for production of urea through a pooling mechanism of domestic gas with R-LNG
  • The Petroleum and Natural Gas Regulatory Board Act, 2006 regulates refining, processing, storage, transportation, distribution, marketing and the sale of petroleum, petroleum products and natural gas.
  • The National Biofuel Policy, 2009 promotes bio-fuel usage, the Government of India has provided a 12.36% concession on excise duty on bio-ethanol and exempted bio-diesel from excise duty.
  • Government is implementing Ethanol Blending Petrol programme under which oil marketing companies are mandated to sell Ethanol blended petrol with upto 10% Ethanol. Mechanism for procurement of ethanol by OMCs to carry out Ethanol Blended Petrol programme was approved on December 10, 2014. In order to give a stimulus to the above programme, the Government has enhanced the Ethanol Procurement Price and opened alternate route like cellulosic and lingo cellulosic materials, including Petrochemical route.
  • Direct sale of bio-diesel by private manufacturers/suppliers to bulk consumers like Railways and State Transport Corporations was allowed on August 10th, 2015.
  • The milestones set in Auto Fuel Policy 2003 have already been achieved. Ministry of Petroleum and Natural Gas has issued a communication to all the concerned stake holders including Oil Marketing Companies for implementation and expansion of Supply of BS-IV auto fuels in phases covering the entire country by April 1, 2017 as per the road map given in Auto Fuel Vision & Policy – 2025.
  • The Government has decided to leapfrog from BS-IV to BS-VI fuels w.e.f. April 1, 2020.
  • The Policy on shale Gas & Oil, 2013 allows companies to apply for shale gas and oil rights in their petroleum exploration licenses and petroleum mining leases.


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