Page 47 - Policy Economic Report - August 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Geologically, the AN basin lies at the intersection of the Andaman and Nicobar Basins, part of the Bengal-
Arakan sedimentary system. The tectonic setting at the boundary of the Indian and Burmese plates have
created numerous stratigraphic traps conducive to hydrocarbon accumulation. The basin’s geological
promise is further amplified by its proximity to prove petroleum systems in Myanmar and North Sumatra.
Global interest in the AN basin has been rekindled following significant gas discoveries in South Andaman
offshore in Indonesia, highlighting geological continuity across this region.

Each sedimentary basin possesses distinct geological characteristics, hydrocarbon system dynamics,
prospectivity, and development challenges, making direct comparison across basins inherently limited.
Consequently, economic and strategic assessments are undertaken in the context of basin-specific
parameters, rather than on a like-for-like comparative basis, to ensure realistic evaluation and policy
decision-making.

Response to Concerns on 20% Blending of Ethanol in Petrol and Beyond

Ministry of Petroleum and Natural Gas has on 4 August 2025 issued a detailed response to certain
concerns raised on the impact of 20% Ethanol Blended Petrol (E-20) on mileage and vehicle life. In
response to the further queries received, a detailed response is listed below:

Biofuels and Natural Gas are India’s bridge fuels. They represent a viable, non-disruptive transition
towards meeting our commitments to a greener world and are in line with our Nationally Determined
Contribution (NDC) wherein India has signed up to Net Zero by 2070. A study on life cycle emissions of
Ethanol done by NITI Aayog has said that GHG emissions in case of use of sugarcane and maize based
Ethanol are less by 65% and 50%, respectively than those of petrol.

In addition to pollution reduction, there have been transformative benefits in terms of benefits to the
rural economy, elimination of sugarcane arrears and improving the viability of maize cultivation in the
country. More income to farmers has not only contributed to furthering their well-being but has also
helped decisively tackle the challenge of suicides by farmers. It may be recalled that in areas like Vidarbha
farmers suicides were widespread a few years ago.

With the Ethanol blending programme, money which was earlier spent on crude oil imports is now going
to our farmers who have become “Urjadaatas” apart from being “Annadatas”. During the last eleven
years from Ethanol Supply Year (ESY) 2014-15 to ESY 2024-25 upto July 2025, Ethanol blending in Petrol
by Public Sector Oil Marketing Companies (OMCs) has resulted in savings/conservation of more than
Rs.1,44,087 crore of foreign exchange, crude oil substitution of about 245 lakh metric tonnes providing
crucial energy security and CO2 emission reduction of approximately 736 lakh metric tonnes,
the equivalent of planting 30 crore trees. At 20% blending, it is expected that payment to the farmers in
this year alone will be to the tune of Rs.40,000 crore and forex savings will be around Rs. 43,000 crores.

Concerns related to performance and mileage being raised now were anticipated as early as 2020 by
Government and an Inter Ministerial Committee (IMC) of the NITI Aayog examined them at length. This
also was backed by research studies carried out by IOCL, ARAI and SIAM.

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