India’s Dependency on Imported Crude Oil Rises To 87 % during current FY

• Posted in OilGas
• on February 23, 2023
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A robust recovery in the demand for fuel and other petroleum products amid flat domestic crude output has led to India’s dependency on imported crude rising to 87 per cent in April-January from 85.3 per cent in the year-ago period, latest data released by the Petroleum Planning & Analysis Cell (PPAC) showed.

The data suggests that that the trend will hold for the last two months of the ongoing fiscal year as well, leading to a higher import dependency for the full year than 85.7 per cent in 2021-22 and 84.4 per cent in 2020-21.

The government wants to cut India’s excessive reliance on imported crude oil but stagnant domestic production and continuously rising demand for petroleum products have been major roadblocks. Reducing expensive oil imports is also one of the key objectives of the government’s push for electric vehicles, biofuels, and other alternative fuels for transportation as well as industrial sectors. Over the past few years, the government has also intensified efforts to increase domestic crude oil production by making exploration and production contracts more lucrative for upstream oil companies and opening vast areas for hydrocarbon exploration.

Heavy reliance on oil imports make the Indian economy vulnerable to volatility in international oil prices, in addition to having a significant bearing on the country’s trade deficit, foreign exchange reserves, rupee’s exchange rate, and inflation.

As per PPAC, which comes under the petroleum and natural gas ministry, India’s domestic consumption of petroleum products in April-January rose nearly 10 per cent year on year to 183.3 million tonnes. However, domestic crude oil production for the period declined by about 1 per cent to 24.6 million tonnes. Crude oil imports in April-January rose 9.4 per cent year on year to 192.4 million tonnes. In value terms, crude oil imports in April-January were at $136.2 billion, against $94.2 billion in the year-ago period, according to PPAC data.

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