India’s Domestic Crude Oil Productions Slips To 28-Year Low In FY22 – Free PDF Download

• The government has been focused on raising domestic production of oil and gas to cut reliance on imports. India imports 85 % of its oil needs and about half of its natural gas requirement.

• Domestic crude oil production has been in decline since the financial year 2014-15 (FY15), dropping to just 4 million tonnes (MT) in FY22, the lowest since FY94.
• The production in 2021-22 represented a decline of 11.8% from 32.2 MT in FY95, increasing the economy’s vulnerability due to skyrocketing global oil prices.

COMPARISON IN PRODUCTION

• India produced 47 million tonnes of crude oil in April, down from 2.5 million tonnes in the same month last year, according to data released by the Ministry of Petroleum and Natural Gas
• Oil and Natural Gas Corporation (ONGC) produced 65 million tonnes of crude oil in April, which was nearly 5 % more than the target set for it and 0.86 % high than the 1.63 million tonnes produced last year.

REASONS

1. Companies’ Imbalanced Production

• Oil India Ltd (OIL) produced 6 % more crude at 2,51,460 tonnes but fields operated by the private sector produced 7.5 % less crude oil at 5,67,570 tonnes
• India’s crude oil production fell 2.67% in the fiscal year ending March 31, as state-owned ONGC produced less than the target, but natural gas output rose helped by eastern Coast’s KG production by Reliance-BP.

2. Aging wells have become less productive over time

• The output is being maintained by investing in technologies to boost the recovery rate.

3. Mobilisation issues

• Oil and Natural Gas Corporation (ONGC) produced 45 million tonnes of crude oil in the fiscal FY22, which was 13.82% lower than the target and 3.62% less than the output in the previous fiscal year.
• This was due to less-than-anticipated production from the WO-16 cluster in the western offshore due to delay in mobilisation of a production unit and less oil in the NBP field due to an inspection-related shutdown

4. Domination of less bidders

• Crude oil production in India is dominated by two major state-owned exploration and production companies, ONGC and Oil India.
• These companies are the key bidders for hydrocarbon blocks in auctions and are the only successful bidders

5. Less investment by Foreign Bidders

• Experts noted that interest from foreign payers in oil and gas exploration in India had been low
• The government has asked ONGC to boost its investments in explorations and increase tie-ups with foreign players to provide technological support in extracting oil and gas from difficult oil and gas fields

• Delays in the operationalisation of hydrocarbon blocks due to delays in major clearances including environmental clearances and approval by the regulator of field development plans are few reasons of lack of private participaton

IMPACT

Latest Burning Issues | Free PDF

Sharing is caring!