Introduction

Ministry of Petroleum and Natural gas, Ministry of Commerce & Industry, Ministry of Chemicals & Fertilizers

India the third-largest oil consuming nation. fourth-largest oil refiner and net exporter of refined products
Estimated around 5 mbpd (million barrels per day) required in India

Of which 1 mbpd is domestically produced while 4 mbpd is imported
I.e. India imports 80 percent of its oil requirement and 45.3% for natural gas/LNG.

India has 0.5% of the oil and gas resources of the world and 15% of the world’s populati n
India imports from Iraq > Saudi Arabia > Iran > Venezuela > UAE
70 percent imports comes from West Asia

ONGC will become India’s first vertically integrated ‘oil major’ company po quisition of HPCL by ONGC, having presence across the entire value chain

Brahmaputra valley of north-east India Ex: Digbo i, Naharkatia, Sibsagar, Badarpur (onshore)
Barmer area of Rajasthan (onshore)
Cauvery on-shore basin in Tamil Nadu.
Andhra Pradesh has both on-shore and offshore oil reserves.
Mumbai High in the Arabian sea (offshore field)
Bassein (offshore field)
Kalol, Ankleshwar in Gujarat (onshore)

Onshore means drilling deep holes under the earth's surface while offshore means drilling underneath the seabed

Petroleum	FDI 100% automatic route
PSUs refineries	FDI 49% automatic route without any divestment

Significance

According to Chief Economic Advisor - $10 per barrel increase in oil prices results in a slowdown in GDP growth by 0.2 to 0.4%, and a rise in inflation of 0.3 to 0.4%

According to UBS, a drop of $10 in the price of oil can improve India’s current account&n sp;and fiscal deficits by 0.5% and 0.1% of GDP, respectively

It is the apex department to control and administer manufacture, storage, transport and handling of explosives, petroleum, compressed gases and other hazardous substances in India.
Statutory Under Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry. [Not under Min of Petroleum]
HQ at Nagpur
It administers the responsibilities delegated under the

Its mission is to control and administer the usage of explosives, petrol stations in India.
Procurement of raw materials for fireworks does not come under the purview of the Explosives Act.
The PESO has been testing samples of crackers only for adherence to the sound limit of 125 decibels at a distance of four metres.
SC entrusted the Petroleum and Explosive Safety Organisation (PESO) with the responsibility of ensuring compliance of banning of antimony, lithium, mercury, arsenic and lead in the manufacture of firecrackers to prevent air pollution

Indian Strategic Petroleum Reserves Limited (a special purpose vehicle of the Oil Industry Development Board under Ministry of Petroleum and Natural Gas)
International Energy Agency recommended that country should maintain a reserve equivalent to 90 days of oil imports for strategic-cum buffer stock purposes
Storage oil reserve

It is a storage of crude oil which would act as a cushion during any external supply disruptions or supply demand mismatch shock.
The crude oil storages are constructed in underground rock caverns and are located on the East and West coast of India.
They are considered to be more environment friendly and incur less evaporation loss than ground level storage
Crude oil from these caverns can be supplied to the Indian Refineries either through pipelines or through a combination of pipelines and ships.

Present: Visakhapatnam (Andhra Pradesh), Mangalore (Karnataka), and Padur (Kerala)
Proposed: Chandikhol (Orrisa), Bikaner (Rajasthan) and Rajkot (Gujrat)

Aravind thought: India can become transit hub for crude oil from middle east to south east

Aim: To enable collection and conversion of used cooking oil to bio-diesel (1G Biofuel)
Significance

India has the potential to recover 220 crore litres of used cooking oil for the production of biodiesel by 2022 if coordinated actions are taken
It is environment friendly because as of now cooking oil is either not discarded or disposed in an environmentally hazardous manner, thereby, choking drains and sewerage systems.
It would promote public health as the initiative would prevent diversion of UCO to smaller restaurants, dhaabas and street-vendors

Ministry of Chemicals and Fertilizers
Petroleum, Chemicals and Petrochemical Investment Regions is a specifically delineated investment region with an area of around 250 square kilometers planned for the establishment of manufacturing facilities for domestic and export led production in petroleum, chemicals & petrochemicals, along with the associated services and infrastructure
PCPIR Policy 2007
GOI approved 4 PCPIRs

PCPIRs are infrastructure driven projects wherein Government of India provides support for development of external physical infrastructure linkages e.g. rail, road, port, airport, telecom through Viability Gap Funding (VGF) and also budgetary support if required
cluster-based development model
The cluster is combination of production units, logistics handling, environmental protection mechanism and social infrastructure.
It includes Special Economic Zones, Free Trade Zones, Warehousing Zones etc

Crude oil prices like any other commodity are determined by global supply and demand.
Supply: Globally Crude oil is majorly controlled by group of countries/ groupings such as OPEC, Russia, US

It could bring down prices by increasing oil production and raise prices by cutting production.
Historically, OPEC (led by Saudi Arabia) used to work as a cartel and fix prices in a favourable band.
In the recent past, OPEC has been working with 10 other countries (including Russia), as OPEC+, to fix the global prices and supply.

Demand: Growing economies generate demand f or oil in general and especially for transporting goods and materials from producers to consumers.
Thus, the stability of oil prices depend on

Predictability of global demand of oil
Ability of the oil-producing countries to act in consort for maintenance of supplies (agreement b/w oil producing companies)

In the past, APM (administered pricing mechanism) was established for crude pricing.

Weighted average of international prices and the domestic cost of production was used to arrive at the administrated price.

Post 2002, administered pricing mechanism was abolished and the price of indigenous crude is linked to international prices.
Petrol & Diesel prices were finally deregulated by Indian Government in 2010 and 2014 respectively
However, international price does not directly reflect in the local prices because the price of fuel at the retail station comprises the additional costs like central government excise and taxes, State government taxes and operating costs, margin of the retailer and subsidies given by the government.