For the Indian oil and gas sector, the year was defined by what occured outside with crude oil prices rising steadily to cross $86 a barrel owing to oil producers starting output cuts from January, before a sharp correction in the third quarter brought it down to below $50 earlier this month.
Consequently, 2018 saw petrol and diesel prices scaling record highs daily under the dynamic pricing regime for transport fuel prices introduced last year, even as the rupee plunged to new lows against the US dollar in the second half of the year, leading to a soaring oil import bill and widening of the current account deficit. High fuel prices spurred the government to make excise cuts and increase its efforts to take India towards a gas-based economy.
In mid-May, the price of petrol in Mumbai breached the Rs 86-a-litre mark as fuel prices across the country increased for the 15th day in a row, surpassing fresh records daily.
Thereafter, following the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC producers deciding in Vienna to raise oil production by some 1 million barrels a day, fuel prices in the country suddenly started declining in June.
Then in September, fuel prices resumed their daily record-breaking upward movement with petrol selling at over Rs 91 a litre in the country's financial capital and at around Rs 84 in Delhi.
Amid calls for bringing petroleum products under GST, the situation forced the government to cut excise duty on petrol and diesel by Rs 1.50 a litre each in early October. Additionally, the state-owned oil marketing companies (OMCs) were mandated to reduce prices by Re 1 a litre each.
Meanwhile, Petroleum Minister Dharmendra Pradhan travelled to Vienna in June to convey India's view that the 13-nation OPEC should end the Asian Premium on oil being charged by the cartel and that prices have risen beyond the threshold that can be sustained by the world.
"There is the need for OPEC governments to move towards responsible pricing," Pradhan said.
In October, Prime Minister Narendra Modi met in New Delhi with the heads of global oil companies and made a strong case for partnership between producers and consumers, following which Saudi Arabia said it expects its output to rise from November to counter the impact of US sanctions on Iran.
Highlighting the significant positioning of India in the oil and gas market, Modi said the oil market was producer-driven and both the quantity and prices were determined by the oil producing countries.
Following the meeting, Saudi Petroleum Minister Khalid Al Falih told reporters that he expects Riyadh's oil production to rise in November from 10.7 million barrels per day (bpd) and that it has the required capacity in place to do so.
"Saudi Arabia has the capacity to produce 12 million bpd and is currently producing 10.7 million bpd and production will rise further," Al Falih said.
The decline in crude prices resumed sharply and UK Brent, for instance, fell from $86 a barrel to under $50 earlier this month, forcing oil producers to decide to reduce its supply by 1.2 million bpd for the first half of 2019.
Petrol and diesel in India have declined by nearly 15 per cent each from the record high levels they had reached in October.
Meanwhile, India received a US waiver to purchase oil from under-sanctions Iran and Pradhan announced that the Finance Ministry is working out the modalities of payment for imports from the Gulf nation.
Continuing its efforts to boost domestic production, the government this year launched the second round bidding for Discovered Small Fields (DSF) with 190 million tonnes of oil and oil equivalent of gas worth more than Rs 1 lakh crore. It is likely to fetch the government Rs 45,000 crore. Of the 25 contract areas on offer, 15 are onland fields and 10 are in shallow offshore areas.
The first round of bidding for DSF in 2016 had generated 134 bids for 34 contract areas of which 30 contracts were awarded. It saw entry of 13 companies that were new to the country's exploration and production industry.
An impressive Rs 5,900 crore of investment was committed for the exploration of 55 oil and gas blocks awarded through the first round of auctions under the new Open Acreage Licensing Policy (OALP). The OALP, under the new Hydrocarbon Exploration and Licensing Policy (HELP), allows the investor to carve out blocks of their choice and submit an Expression of Interest throughout the year.
In August, the cabinet approved a policy framework for the exploration of hydrocarbons, permitting private companies to exploit unconventional hydrocarbons, including shale gas and coal bed methane (CBM), from their existing acreages.
In a major step towards ushering in a clean gas-based economy, India launched its biggest auction of city gas distribution (CGD) networks, offering permits for selling compressed and piped natural gas (CNG and PNG) in 86 geographical areas (GAs) to bring gas to around half of the country's population in 26 states and union territories. The tenth CGD bidding round was also launched subsequently in 50 GAs spread over 124 districts in 14 states.
In a major move on sustainable development, the government brought out the National Biofuels Policy for a sector poised to become an economy worth Rs 1 lakh crore, aimed at providing a cost-effective, pollution-free import substitute to polluting fossil fuels.The policy details the architecture for India to make the move towards adopting second generation, or advanced, biofuels in the future, from the current first
generation ones being used, which are essentially sugar-based.In the notable foreign investment in the sector during the year, the Ratnagiri Refinery and Petrochemicals Ltd (RRPCL) was created as a 50:50 joint venture between Indian state-run OMCs with Saudi Aramco and Abu Dhabi's national oil company ADNOC. The mega refinery will be capable of processing 1.2 million bpd of crude oil by 2022, or 60 MT per annum.