Policy prop fails to check oil imports
Oil Imports make up 82.9 per cent of total consumption in 2017-18 from 78.3 per cent 2014-15.
- Published 13.03.19, 1:06 AM
- Updated 13.03.19, 1:06 AM
- a min read
Domestic oil and gas output has fallen in the last four years and imports have increased even as the government changed the rules for exploration to attract investments.
Crude oil production has declined 4.7 per cent and natural gas by 2.9 per cent since 2014-15, while consumption increased at a healthy annual rate.
Government data showed crude oil production to have fallen to 35 million tonnes (mt) in 2017-18 from 37mt in 214-15. Gas output dropped to 32,649 million metric standard cubic meters (mmscm) from 33,657mmscm during the same period.
The decline in output has come despite the government coming out with changed exploration norms. Prime Minister Narendra Modi had spelt out the need to reduce import dependence of oil by 10 per cent by 2022.
However, data show the dependence on imports has only risen. Imports make up 82.9 per cent of total consumption in 2017-18 from 78.3 per cent 2014-15.
The oil ministry has estimated crude oil production would increase to 38mt by 2021-22 and gas production to 71.9mmscm by 2021-22 because of various policy measures to attract investment in the country’s sedimentary basins.
According to the International Energy Agency (IEA), oil demand is expected to grow 7.1 million barrels per day in 2024, with India and China accounting for 44 per cent of the rise in demand. By 2024, India’s oil demand growth will also match that of China.
The forecast seems to indicate the call to reduce import dependence by 10 per cent will remain a mirage given the increasing demand and lower domestic output.
The government has awarded 311 exploration blocks through a nomination basis and bidding. But only 178 blocks are under production.
According to the petroleum ministry, after the ninth round of bidding under the New Exploration and Licensing Policy (NELP), 117 companies are operating in India, of which 48 are foreign players.
The government has taken several policy measures to ramp up domestic production with reforms such as Hydrocarbon Exploration Licensing Policy, or HELP.
It has also streamlined operations under NELP, though the results are yet to show on the ground.
It has approved a plan to incentivise contractors to go into unexplored areas by exempting them from sharing revenue with the government, unless windfall gains are made.