NEW DELHI: 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 has 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 tonne (mmt), compared to 165.5 mmt in the previous year. The country’s largest oil producer, state-run Oil and Natural Gas CorporationBSE 1.97 % (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 on 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.
