India Oil and Gas Sector: Navigating Supply Chain Risks and Price Volatility
The Indian oil and gas sector stands at a critical juncture as the nation balances rapid industrial expansion with the necessity of a resilient energy & sustainable economy. According to this report by the PHD Chamber of Commerce and Industry (PHDCCI), India’s primary energy demand is projected to grow at a CAGR of 5.4%, driven by a robust economic growth rate exceeding 6%. However, with over 85% of crude oil requirements met through imports, the nation remains vulnerable to global geopolitical shifts and maritime disruptions in chokepoints like the Strait of Hormuz and the Suez Canal.
Mitigating Risks and Enhancing Energy Security
The PHDCCI report outlines a multi-pronged strategy to safeguard the economy and energy landscape from external shocks. Key recommendations include:
- Expansion of Strategic Petroleum Reserves (SPR): Moving beyond the current 5.33 MMT capacity to include an additional 6.5 MMT through Public-Private Partnerships (PPP) in Chandikhol and Padur.
- Market Diversification: Reducing dependency on traditional regions by expanding sourcing from Africa, the Americas, and Australia.
- Upstream Policy Reforms: Enhancing the “Ease of Doing Business” through simplified contract approvals and revised domestic gas pricing mechanisms to incentivize local production.
Driving an Energy & Sustainable Economy
The transition toward an energy & sustainable economy is no longer optional. The report emphasizes fuel diversification as a core pillar of long-term stability. With a goal of 500 GW of renewable capacity by 2030, India is aggressively promoting ethanol blending, compressed bio-gas (CBG), and green hydrogen.
Outlook for Price Volatility
While Brent crude is forecast to soften to approximately $66/bbl by 2026 due to non-OPEC+ supply expansion, the Indian oil and gas sector must remain vigilant. PHDCCI’s analysis serves as a roadmap for policymakers and industry leaders to build a fortified energy infrastructure that ensures affordability, accessibility, and sustainability for a “Viksit Bharat.”