India Programme - Mapping of global best practice policies and regulations relevant to India's oil and gas sector priorities

Energy and green growth is one of the key strands of the UK's strategic partnership with India. The UK is the largest G20 investor in India with large investments in energy. India is the fourth largest source of Foreign Direct Investment (FDI) projects in the UK including in the energy sector. Alongside work on renewable energy and energy efficiency, Oil and Gas is an important element of India - UK bilateral co-operation on energy.

The Oil and Gas sector in India is critical to support India's economic growth and poverty reduction efforts. However, India does not produce enough domestic crude oil or gas to meet its demand and hence has to imports most of it ($ 87.6 billion in 2017-18) from other countries. With the recent rally in crude oil prices, it is expected that this may result in substantial increases in energy costs. Given that transport and industry sectors are major consumers of oil and gas, increase in energy costs will adversely impact their potential for employment and income generation in the medium term. In addition, the value import may increase substantially, adversely affecting India's balance of payments and ability to spend resources on critical developmental services, e.g. healthcare, education. Hence there is an urgent need for finding means of increasing domestic production to reduce import dependency and achieve energy security. The use of clean Gas for cooking presents a significant potential to reduce health hazards to the poor, arising from air pollution due to use of traditional fuels.

The oil and gas sector in India is on the cusp of its most profound transition, driven by more open and progressive policies and regulations, and the desire for energy security. Globally, the governments have structured and reformed their Oil & Gas policy and regulatory frameworks to meet their specific objective at that moment as well the future direction they aspire for. This could include attracting investments, developing markets, maximizing resource monetization, reducing government capital at risk, development of local capabilities etc. Sometimes these changes includes a shift in the governance structure to drive effectiveness and transparency.

It is also important to note that policy and regulatory overhauls in many countries examined are more a "journey" over several years that is refined with feedback from many stakeholders rather than a "one time event". Lawmakers have to adjust according to prevailing geological, markets and macro-economic context.

India's context is unique, but India could also benefit from experiences adopted in other countries to support the growth of the sector. The UK and India envisage developing a strong partnership in the oil and gas sector to support mutual prosperity.

Additional information: Please refer the Project No 1825 and ITT No 2484