01 October 2025
India’s energy landscape is witnessing a transformative shift as two of the nation’s leading energy companies join forces to accelerate the country’s transition toward cleaner fuel alternatives. Oil India Limited and GAIL (India) Limited have formalized a strategic partnership that promises to reshape the natural gas sector and strengthen India’s energy security infrastructure.
The memorandum of understanding signed between the upstream oil and gas explorer and the nation’s largest natural gas transmission company represents more than just a business agreement. It symbolizes a coordinated effort to unlock the full potential of India’s natural gas resources while expanding access to cleaner energy across the country.
The collaboration brings together Oil India’s exploration and production expertise with GAIL’s extensive marketing and distribution network. This strategic alignment aims to maximize the value chain from gas production to end-user delivery, ensuring efficient monetization of domestic gas resources.
India’s natural gas consumption has reached unprecedented levels, hitting 68.76 billion cubic meters during the fiscal year 2023-24, marking a significant 14.62% growth compared to the previous year. This surge reflects the country’s increasing reliance on cleaner fuel alternatives across multiple sectors.
The domestic gas production contributed 36 billion cubic meters to this total consumption, representing the highest annual domestic production on record. The remaining demand was met through liquefied natural gas imports, which reached 32.76 billion cubic meters during the same period.
Looking ahead, India’s natural gas consumption is projected to experience remarkable growth. Industry projections suggest consumption could rise by nearly 60% by 2030, reaching 297 million standard cubic meters per day, and more than double by 2040 to 496 million standard cubic meters per day [1].
GAIL’s extensive pipeline network forms the backbone of India’s natural gas distribution system. The company currently operates approximately 16,421 kilometers of gas pipelines, commanding around 75% market share in natural gas transmission within the country. This vast network carries over 127 million standard cubic meters of gas daily, connecting multiple gas sources to various industrial and domestic consumers.[2]
Recent infrastructure investments demonstrate the sector’s commitment to expansion. GAIL has allocated ₹844 crore to enhance its Dahej-Uran-Dabhol-Panvel pipeline network capacity from 19.9 to 22.5 million standard cubic meters per day. Such investments reflect the growing demand and the need for robust distribution infrastructure.[3]
The partnership aligns seamlessly with India’s ambitious energy transition goals. The government aims to increase natural gas’s share in the country’s primary energy mix from the current 7% to 15% by 2030. This transition positions natural gas as a crucial bridge fuel, supporting India’s journey toward achieving net-zero emissions by 2070.
City gas distribution emerges as a key growth driver in this transformation. The sector, which includes compressed natural gas for vehicles and piped natural gas for households, consumed 37 million standard cubic meters per day in 2023-24. Projections indicate this could expand to over 87 million standard cubic meters per day by 2030, making it the largest consumer segment.[4]
Adding momentum to the partnership, Oil India recently confirmed natural gas presence in its Vijayapuram exploratory well located in the Andaman Shallow Offshore Block. The preliminary analysis revealed intermittent gas inflows during production testing, with ongoing isotope studies to evaluate the potential for larger hydrocarbon accumulations.
This discovery represents more than just an addition to reserves; it demonstrates the continued viability of India’s domestic exploration efforts. Such findings are crucial for reducing import dependence and strengthening energy security, especially as India currently meets approximately half of its gas needs through imports.
The energy markets have taken note of this strategic collaboration. While Oil India shares experienced modest fluctuations following the announcement, closing at ₹414 with a 0.78% decline, the long-term implications suggest positive momentum for both companies and the broader natural gas sector.
The collaboration extends beyond traditional gas supply arrangements. Both companies envision exploring opportunities in upstream development, liquefied natural gas operations, city gas distribution, compressed biogas, and emerging clean energy technologies. This comprehensive approach positions the partnership to adapt to evolving market dynamics and technological innovations.
The partnership’s strategic importance extends to national energy security considerations. By combining domestic production capabilities with efficient distribution networks, India can reduce its vulnerability to supply disruptions and price volatility in international markets.
The collaboration also supports industrial competitiveness by ensuring reliable and cost-effective energy supply to key sectors. Fertilizer manufacturing, which consumed 21.04 billion cubic meters of natural gas in 2023-24 [5], represents nearly one-third of total consumption. Stable gas supply through domestic partnerships helps maintain agricultural input affordability and food security.
The Oil India-GAIL partnership represents a milestone in India’s energy journey. As the country navigates its transition toward cleaner energy sources while maintaining economic growth, such strategic collaborations become essential building blocks for a sustainable energy future.
With natural gas consumption projected to grow substantially over the next two decades, partnerships that combine upstream expertise with midstream infrastructure create synergies essential for meeting this demand efficiently. This collaboration not only strengthens both companies’ market positions but also contributes meaningfully to India’s broader energy security and environmental objectives.
[1] Gas Outlook, Indian gas consumption hits highest-ever annual level. https://gasoutlook.com/analysis/indian-gas-consumption-hits-highest-ever-annual-level/
[2] GAIL E-Bank, Requisition for Common Carrier Capacity Booking. https://gailebank.gail.co.in/goga/NewApplication/index.html
[3] Economic Times, GAIL to invest Rs 844 crore in pipeline capacity. https://economictimes.com/industry/energy/oil-gas/gail-to-invest-rs-844-crore-in-pipeline-capacity/articleshow/122028865.cms
[4] IBEF, India’s natural gas consumption to more than double by 2040: Petroleum and Natural Gas Regulatory Board (PNGRB) study. https://ibef.org/news/india-s-natural-gas-consumption-to-more-than-double-by-2040-petroleum-and-natural-gas-regulatory-board-pngrb-study
[5] Elite Wealth, Oil India, GAIL Ink MoU to Strengthen Natural Gas Collaboration and Cleaner Energy Access. https://elitewealth.in/oil-india-gail-ink-mou-to-strengthen-natural-gas-collaboration-and-cleaner-energy-access/
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