Domestic crude oil production fell for the fourth straight year in 2015-16, even as oil consumption rocketed 11%, pushing up India’s import dependence. A collapse in oil prices coupled with a rapid economic growth helped push up oil consumption at home. More vehicle purchases, increased use of diesel for irrigation due to weak monsoon and rising air traffic chiefly drove up consumption to 183.5 million metric ton (mmt), compared with 165.5 mmt in the previous year.
In comparison, India produced just 36.9 mmt of crude oil in 2015-16, lower than 37.5 mmt in the previous year. The country’s largest oil producer, state-run Oil and Natural Gas Corporation (ONGC), witnessed an output decline to 18.5 mmt from 18.6 mmt in the previous year. Oil producers have been struggling with ageing fields where outputs have been falling. Their inability to bring fresh big reserves into production lately has kept production stagnant.
“The bigger problem is that the exploration activity didn’t pick up in the last decade,” said Gaurav Moda, consultant at KPMG, underlining the need to enhance exploration activity in the country to be able to accelerate output in the future. Without which, Moda says, India’s dependence on overseas oil will only grow in future. India’s import dependence in oil rose to 81% in 2015-16 from 78.5% in the previous year. Just last year Prime Minister Narendra Modi had set a target of bringing this down to 67% by 2022.
The government has unveiled new exploration policies for its oil and gas blocks lately, aiming to plug loopholes in its previous policies that encouraged only limited participation of resource-rich foreign oil companies and couldn’t dramatically boost the domestic output. India imported 202 mmt of crude oil in 2015-16, nearly 7% higher in volume, but paid just $64 billion, 43% lower due to the global oil collapse.
Natrural gas consumption marginally rose to 52 billion cubic meters, aided by 14% rise in imports while domestic production fell 4%. Lower prices have raised consumption of gas by industry and the transport sector. The consumption of petrol and diesel rose 14% and 7.5% respectively even though the government imposed more taxes and didn’t pass on the entire benefit of crude oil plunge to the consumers. The consumption of aviation turbine fuel (ATF), which contribute about 40% of airlines’ operating cost, grew 8.8% as airlines lowered fares and attracted more passengers. Robbie Gould JerseyShare This