India energy: 2016 in review and outlook for 2017 Report

Insight 27 January 2017

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Report summary

India's energy demand increased by 3.7% year-on-year in 2016, but imports increased by 5.7%, led by LNG, LPG and gasoline. While coal production increased in the past two years, domestic production of oil and gas either stagnated or declined. In 2016, the government mentioned an ambitious target of a 10% reduction in India's oil import dependency by 2022. In this insight, we ask our Commodity Analytics team on how the various energy sectors have performed in 2016 and comment on what lies ahead in 2017. Will India be able to accelerate policy reforms that provide market-driven pricing and attract investment to boost domestic hydrocarbon production? Can India take necessary measures in 2017 to improve energy efficiency and increase renewable energy supply faster than conventional energy supply? Will the Goods and Service Tax regulation outweigh the downturn imposed by currency demonetisation?

Upstream and LNG: policy reforms, pricing and project development
- Wood Mackenzie (WM): India's oil import dependency is now at over 82%. Are the policy changes introduced in 2016 enough to revive investment to boost domestic production?
- WM: So, what is on the horizon for India upstream in 2017?
- WM: India's LNG imports surged by 27% year-on-year in 2016. Do you see this continuing into 2017?
Power and renewables: solar tariffs and UDAY
- WM: India made a mark in 2016 by adding 4.7 GW solar capacity. Do you think the momentum will continue? How will the overall renewables sector perform in 2017?
- WM: The government launched a revival scheme, Ujwal DISCOM Assurance Yojana (UDAY), to rescue the bankrupt distribution companies and help revive demand. What is the status of the scheme? How successful has it been since its launch in Q4 2015?
Coal: domestic production and imports
- WM: Did India's coal demand growth fall in 2016? If so, why, and what are the risks to coal imports?
Oil, refining and chemicals: tighter fuel specifications and electric vehicles
- WM: Can we expect the strong demand momentum of last year to extend into 2017?
- WM: What else should downstream players in India look out for? Will there be a government push for electric vehicles in 2017?
- WM: Should Indian refiners be concerned about OPEC's cut in production?
Conclusion