History of Natural Gas in India
Exploration and production (E&P) in India began in the 19th century. In 1866, the first well was drilled, and the first commercial discovery was made in Digboi in 1889. E&P activities were thereafter mainly limited to the Assam Oil Company and Attock Oil.
The oil and gas business truly took off after India gained independence in the 1950s and 1960s. In 1948, the Government of India (GoI) enacted the Industrial Policy Statement, calling for the development of the petroleum industry in India. Until 1955, private companies such as the Burmah Oil Company/Assam Oil Company (BOC/AOC) conducted exploration work, but most of India, in particular offshore, remained unexplored. In 1955, the GoI chose to exploit oil and gas resources by establishing the Oil and Natural Gas Directorate (ONGD), which was subordinate to the Ministry of Natural Resources and Scientific Research at the time. In 1956, the GoI adopted the Industrial Policy Resolution, placing the development of the oil industry under the responsibility of the state, transforming the Directorate into a commission (ONGC), whose authority was progressively enhanced over the following years. OIL India Private Ltd was founded in 1959, with BOC/AOC owning two-thirds and the Government of India owning the remainder. In 1961, it became a Joint Venture (JV) with equal ownership by BOC/AOC and the GoI. OIL began producing gas in Assam in 1959, followed by the ONGC in Gujarat in 1964.
Gas demand was very low until the 1970s but started to pick up when ONGC’s Bombay High started producing in 1974. In 1981, OIL became a wholly state-owned company. With the growth of gas production, it became necessary to develop the downstream part of the gas value chain. In 1984, state-owned GAIL was created to promote gas use and develop midstream and downstream gas infrastructure.
In 1991, India entered into a liberalisation process for the economy, and began to deregulate the gas market and disengage itself from Public Service Undertakings (PSU). The Directorate General of Hydrocarbons (DGH) was created in 1993 to oversee the upstream sector. In 1994, ONGC was reorganised as a public company and GoI divested 2% of its share through competitive bidding. 10% was sold to India Oil Corporation (IOC) in 1999, and 2.5% to GAIL. Through the NELP, the GoI began to open the upstream sector to private and international investment in 1997, granting them 100% project ownership. There were eight licencing cycles between 1997 and 2009 (for more information, read the sections on NELP under the domestic production section). Meanwhile, GAIL began to establish a transmission network with the completion of the first major transregional pipeline, the Hazira-Vijaipur-Jagdishpur (HVJ) in 1991, and gas distribution in key cities began gradually over the next decade. A few private and international enterprises have joined the Indian gas industry in various stages of the gas value chain (upstream, transmission, LNG terminals, and distribution). RIL, which is involved in upstream, transmission, and distribution, Adani Gas (transmission, distribution), Crain India and many more.
