Crude oil production in India has been on a decline, decreasing by 3 per cent per annum over the last seven years, until FY24. This decline has led to an increase in the country’s import dependence, which has risen from 86 per cent in FY17 to 89 per cent in FY24.
The India Energy Scenario FY24 report, released by the Bureau of Energy Efficiency (BEE) under the Power Ministry, highlights that in FY24, India’s total primary energy supply was 910 Mtoe, with coal accounting for 60 per cent, oil for 28 per cent, gas for 7 per cent, and non-fossil energy sources for 5 per cent.
The report attributes the decline in crude oil production to factors such as natural depletion of older fields, technical challenges in certain reservoirs, and disruptions in field activities. To tackle this issue, the government has implemented initiatives like the Hydrocarbon Exploration and Licensing Policy (HELP) 2019 and the induction of suitable technologies on selective fields.
State-run companies like ONGC and Oil India (OIL) contributed significantly to crude oil production in 2023-24, with the remaining production coming from Production Sharing Contracts (PSC) or Revenue Sharing Contracts (RSC) regime.
Despite efforts to increase production, Fitch Ratings expects India’s crude oil production to fall by 2-3 per cent in FY25. However, production is anticipated to grow by low single-digit percentages in FY26, with advancements in technology and production at offshore fields in the KG Basin.
India’s crude oil import dependency is expected to continue rising in the near term, driven by faster growth in petroleum product demand compared to domestic production. The country imported 234 mt of crude oil in FY24, with imports accounting for 89 per cent of the total crude oil supply.
While historically India relied on the Middle East for crude oil supply, imports from Eurasia, mainly Russia, have increased significantly in recent years. India’s refining capacity stands at 256.8 mtpa, making it the fourth-largest refiner in the world.
The report also notes a rise in the import of petroleum products, with production increasing annually by 2 per cent and imports by 4 per cent. This trend is reflective of the growing demand for refined petroleum products in the country.
