Hardeep Singh Puri returns as Minister of Petroleum and Natural Gas. What to watch out for from this term?

Meet the Minister

Hardeep Singh Puri was first appointed as Minister of Petroleum and Natural Gas in 2021. In Modi’s second-term, Puri also held the position of Minister for Housing and Urban Affairs.

A Member of Parliament in the Rajya Sabha, has been at the forefront of handling the oil import issues pertaining to India since the war broke out between Russia and Ukraine.

Status check

With India’s energy demand—and particularly oil and gas demand—rising, the oil and gas sector remains in focus. To meet India’s rising oil demand, the country began sourcing crude oil from Russia in 2022 at discounted prices after the war broke between Moscow and Ukraine. The crude oil bought by India, in turn, helped in keeping the oil prices in check in the global market.

The rising demand of crude oil in India also resulted in rising oil imports as the country now gets around 87 percent of its oil requirements from other countries. To reduce this reliance, the ministry of petroleum and natural gas (MoPNG) has been pushing for the use of alternate fuels in the country.

The previous government had set the target of achieving 20 percent blending of ethanol in petrol by 2025, from the previous target of 2030, compared to the present levels of 10 percent. India achieved its target of 10 percent blending ahead of the target deadline in 2022.

Similarly, the government is also working on increasing consumption of natural gas in the country to help achieve India’s net-zero goals by 2070. The government aims to increase the share of natural gas to 15 percent by 2030 from present 6 percent.

Setting the agenda for 2024-2029

In the third-term of the Modi government, the focus of the oil and gas ministry is expected to remain on the key issues including boosting domestic oil and gas production, diversifying sources for crude oil imports and increasing natural gas consumption.

Boosting domestic production: Domestic crude oil production in FY24 was 29.4 million metric tonnes (MMT), almost steady from 29.2 MMT in the previous year. The government has been opening areas for exploration in the country to boost production.

Increasing oil imports: Amid rising oil demand and steady domestic production, India’s crude oil imports were the highest in FY24 as the country met 87.7 percent of its oil requirements from supply from other countries.

Fuel prices: Even though oil marketing companies (OMCs) revise domestic petrol and diesel price in the country, the Indian government has reiterated that fuel prices were among the lowest in the country in recent years. With crude oil prices cooling in recent months, cut in fuel prices remain awaited.

“Margins are positive now for OMCs on both petrol and diesel. Because it is not an under-recovery situation, fuel price revision could be a measured decision as crude oil prices are not very high and marketing margins are positive. Crude oil prices have come down, but the margins are not very healthy too, so scope of price cut is very limited as of now,” said Prashant Vasisht, VP & co-head, corporate ratings, ICRA.