Oil and Petroleum – Prelims Pointers
Why in News?
As USA imposed new sanctions on two Russian oil companies, effectively making Indian refiners sourcing crude look beyond them, Union Petroleum and Natural Gas Minister Hardeep Singh Puri asserted that there is enough global crude oil supply. The issue of Indian Oil Supplies is quite rife in recent times.
PYQ
2020 Prelims
The term ‘West Texas Intermediate’, sometimes found in news, refers to a grade of ()
(a) Crude oil
(b) Bullion
(c) Rare earth elements
(d) Uranium
2025 Prelims
Consider the following activities:
I. Production of crude oil
II. Refining, storage and distribution of petroleum products
III. Marketing and sale of petroleum products
IV. Production of natural gas
How many of the above activities are regulated by the Petroleum and Natural Gas Regulatory Board in our country?
- Only one
- Only two
- Only three
- All the four
Major Global Crude Oil Benchmarks
The most widely recognized global benchmarks are:
- West Texas Intermediate (WTI):
- Geographic Origin/Delivery Point: Midland-Cushing, Oklahoma, USA.
- Classification: Generally a light, sweet crude (low density, low sulfur content).
- Key Use: Primary benchmark for North American crude oil pricing.
- Brent Blend:
- Geographic Origin/Delivery Point: North Sea (sourced from fields like Brent, Forties, Oseberg, and Ekofisk).
- Classification: Also a light, sweet crude, though typically slightly denser and with marginally higher sulfur than WTI.
- Key Use: Primary benchmark for crude oil from Europe, Africa, and the Middle East flowing West; it is the most significant global oil price benchmark.
- Dubai/Oman Crude (or Dubai-Oman Basket):
- Geographic Origin: Middle East (Dubai, Oman).
- Classification: A medium to heavy, sour crude (higher density, higher sulfur content).
- Key Use: Primary benchmark for Middle Eastern crude oil exports to Asia (East).
Classification of Crude Oil
1. Classification by Density (API Gravity)
| Classification | Density Relative to Water ( the lighter the better) |
| Light Crude | Lighter than water |
| Medium Crude | Varies |
| Heavy Crude | Heavier than water (may sink) |
2. Classification by Sulfur Content (Sweetness)
| Classification | Sulfur Content | Refining Difficulty |
| Sweet Crude | Less than or equal to 0.5% | Easier (Less costly refining) |
| Sour Crude | More than 0.5% | More complex (Requires costly desulfurization) |
Largest Crude Oil Producers, Exporters, and Reserves in World
| Rank | Largest Producers (Crude Oil) | Largest Exporters (Crude Oil) | Largest Proven Reserves (Crude Oil) |
| 1 | United States | Saudi Arabia | Venezuela |
| 2 | Saudi Arabia | Russia | Saudi Arabia |
| 3 | Russia | Iraq | Canada |
| 4 | Canada | United States | Iran |
| 5 | China | Canada | Iraq |
Top Sources of Crude Oil to India
| Rank | Country | Estimated Share of India’s Crude Oil Imports (FY 2025-2026 est.) | Why? |
| 1 | Russia | ~34% – 36% | Became the largest supplier since 2022, primarily due to discounted prices. However, recent geopolitical developments and US sanctions on Russian oil majors may lead to a future decline in this share. |
| 2 | Iraq | ~20% – 23% | Traditionally India’s largest supplier for many years, offering stable supplies and competitive terms. |
| 3 | Saudi Arabia | ~16% – 18% | A long-standing, key strategic partner and major supplier from the Middle East. |
| 4 | United Arab Emirates (UAE) | ~8% – 10% | Another reliable Middle Eastern supplier, often involved in strategic energy investments in India. |
| 5 | United States (US) | ~6% – 7% | Volumes have been increasing due to trade diversification and favorable market conditions. |
Top Countries by Oil Refining Capacity : 2023
| Rank | Country | Capacity (Thousand Barrels Per Day) |
| 1 | United States | 18,620 |
| 2 | China | 14,180 |
| 3 | Russia | 6,420 |
| 4 | India | 4,620 |
| 5 | Japan | 3,600 |
Top Countries by Refined Petroleum Exports : 2023
| Rank | Country | Export Value (Billion USD) |
| 1 | United States | $112.9 |
| 2 | India | $85.0 |
| 3 | Netherlands | $72.0 |
| 4 | Singapore | $57.0 |
| 5 | South Korea | $50.9 |
- The United States consistently ranks high in both capacity and export volume, utilizing its large domestic production of crude oil (which is the world’s largest producer) and its significant refining infrastructure.
- Countries like India, Singapore, and South Korea are major exporters despite being net importers of crude oil, as they have large, advanced refineries that process crude from other countries into products for the global market.
- India is a net exporter of petroleum products.
About PNGRB
- Statutory Body: PNGRB is a statutory body established under The Petroleum and Natural Gas Regulatory Board Act, 2006.
- Mandate: It regulates the downstream (refining, processing, storage, transport, distribution, marketing, and sale) activities in the petroleum and natural gas sector in India.
- Exclusion: It does not regulate the upstream activities, i.e., the production of crude oil and natural gas.
- Objective: To protect the interests of consumers and entities, promote competitive markets, and ensure uninterrupted and adequate supply of petroleum, petroleum products, and natural gas.
Key Functions of PNGRB
- Registration/Authorization: Registers or authorizes entities for:
- Marketing notified petroleum, petroleum products, and natural gas.
- Establishing and operating Liquefied Natural Gas (LNG) terminals.
- Establishing storage facilities above a specified capacity.
- Infrastructure Authorization: Authorizes entities to lay, build, operate, or expand:
- A common carrier or contract carrier pipeline.
- City or local natural gas distribution networks (CGD).
- Pipeline Declaration: Declares pipelines as common carrier or contract carrier.
- Tariff and Access: Regulates transportation rates/tariffs and access to common carrier pipelines and CGD networks to ensure fair competition.
- Price Monitoring: Monitors prices and takes corrective measures to prevent restrictive trade practices by entities.
- Supply Assurance: Secures equitable distribution and ensures adequate availability of notified products.
- Technical and Safety Standards: Lays down and enforces technical standards and specifications, including safety standards, for activities like pipeline construction and operation.
- Service Obligations: Provides and enforces retail service obligations for retail outlets and marketing service obligations for entities (e.g., maintaining minimum stock, setting up outlets in remote areas).
- Dispute Settlement: Adjudicates and decides disputes or matters arising among entities or between an entity and any other person related to the regulated activities.