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India's oil import dependence jumps to 84 percent

May 7,2019

Prime Minister Narendra Modi had set a target to cut India's oil import dependence by 10% but the country's dependence on oil import for meeting its energy needs has jumped to a multi-year high of nearly 84%, latest government data showed. Speaking at the conference 'Urja Sangam' in March 2015, the Prime Minister had said that India needs to bring down its oil import dependence from 77% in 2013-14 to 67% by 2022 when India will celebrate its 75th year of independence. Further, the dependence can be cut to half by 2030, he had said.


But with consumption growing at a fast pace and domestic output remaining constant, India's oil import dependence has raised from 82.9% in 2017-18 to 83.7% in 2018-19, according to the oil ministry's Petroleum Planning and Analysis Cell (PPAC). Import dependence rose to 81.7% in 2018-19, which was 80.6% in 2015-16, PPAC said.


The country's oil consumption grew from 184.7 million tonnes in 2015-16 to 194.6 million tonnes in 2018-19 and 206.2 million tonnes in the year thereafter. In 2018-19, demand grew by 2.6% to 211.6 million tonnes.


In contrast, domestic output continues to fall. India's crude oil output fell from 36.9 million tonnes in 2015-16 to 36 million tonnes in 2016-17. The trend of negative growth continues in the following years as well as output fell to 35.7 million tonnes in 2017-18 and to 34.2 million tonnes in the fiscal year that ended on March 31, 2019, PPAC data showed.


The government is focusing on measures like increasing domestic production, promoting the use of biofuel and energy conservation to reduce dependence on imported crude oil. It changed exploration rules multiple times during the last five years to get the elusive private and foreign investment.


The previous New Exploration Licensing Policy (NELP) was changed to Hydrocarbon Exploration and Licensing Policy (HELP) promising pricing and marketing freedom.


HELP brought in open acreage licensing policy that gave companies the freedom to choose areas they want to explore. Discovered oil and gas fields, taken away from state-owned firms, were also auctioned but neither this nor the open acreage policy managed to get big names to invest in exploration and production of oil and gas.


According to PPAC, India spent USD 111.9 billion on oil imports in 2018-19, up from USD 87.8 billion in the previous fiscal year. The import bill was USD 64 billion in 2015-16. For the current fiscal, it projected crude oil imports to rise to 233 million tonnes and foreign exchange spending on it to marginally increase to USD 112.7 billion.


State-owned Oil and Natural Gas Corp's (ONGC) output fell to 19.6 million tonnes in 2018-19 from 20.8 million tonnes in the previous year. ONGC oil production was 20.9 million tonnes in 2016-17 and 21.1 million tonnes in 2015-16.


The output from fields operated by private firms has dropped from 11.2 million tonnes in 2015-16 to 9.6 million tonnes in 2018-19.