Friday, June 24, 2022

FY21: India’s crude oil production has declined by 20% in a decade, shows official data

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  • While cumulative crude oil production stood at 38,089.689 TMT in FY12, in FY21 it has gone down to 30,491.77 TMT

  • Crude oil production by private/JV companies in the PSC regime was 7,371.65 TMT which was 10.81 percent lower than the target and 12.62 percent lower when compared to FY20

New Delhi: In the backdrop of the government’s call for an Atmanirbhar Bharat, India’s cumulative crude oil production has registered a decline of 20 percent over the last decade. An analysis of official data sourced from the Ministry of Petroleum and Natural Gas shows that there has been a consistent decline in crude oil output between FY12 and FY21. While cumulative crude oil production stood at 38,089.689 TMT in FY12, in FY21 it has gone down to 30,491.77 TMT. The FY21 figure is 5.65 percent lower than the target and 5.22 percent lower when compared to the previous financial year. 

Alt="FY21: India’s crude oil production has declined by 20% in a decade, shows official data"

Data also showed that the biggest decline in India’s crude oil production has been recorded since FY19, which has continued steadily till FY21. The figure for March was 5.63 percent lower than the target for the month and 3.13 percent lower when compared with March 2020 as it settled at 2,612.96 TMT.

ONGC, OIL miss monthly targets and record decline in crude oil production y-o-y

Cumulative crude oil production by state-run Oil and Natural Gas Corporation (ONGC) in FY21 was 20,182.75 TMT which was 3.58 percent lower than the annual target and 2.15 percent lower than the previous financial year. In March, the crude oil production was 1,713.08 TMT, which was 3.11 percent lower than the target and 3.66 percent lower when compared with March 2020. 

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Crude oil production recorded by OIL (Oil India Ltd) in FY21 was 2,937.37 TMT, which was 5.88 percent lower than the annual target and 5.45 percent lower in comparison to FY20. For March, the production figure was 249.61 TMT, which was 8.40 percent lower than the target and 1.75 percent lower when compared with March 2020. 

Private/JV fields miss target by 10.81%

Crude oil production by private/JV companies in the PSC (Production Sharing Contract) regime was 7,371.65 TMT which was 10.81 percent lower than the target and 12.62 percent lower when compared to FY20. For March, the crude oil production figure stood at 650.26 TMT, which was 10.70 percent lower than the target and 2.26 percent lower when compared to March 2020. 

India’s declining crude oil production and energy security

The need for ensuring India’s energy security is a pressing need for the government, especially in the face of a historical rise in fuel prices in India recently when petrol touched Rs 100 per litre in March. Since India imports over 80 percent of its crude requirement, it has been heavily dependent on the Organisation of the Petroleum Exporting Countries (OPEC) for imports. And OPEC’s refusal to yield to India’s request to ease supply curbs to cool down crude oil prices has prompted the government to look for alternative sources of crude oil and to decrease its reliance on imports by boosting domestic crude oil production and alternative energy sources. 

However, the inability of India’s largest oil and gas explorer ONGC has prompted the government to put in place a restructuring plan for the Maharatna oil company, which will see the company performing the role of an ‘enabler’ more than an oil exploration and production entity. According to an official document accessed by PSU Watch, the government has urged ONGC to invite private players for oil fields with high prospectivity and to monetise or disinvest marginal producing fields. However, as is evident from the data, even the fields under production sharing contract regime, which are being operated by a joint venture of public and private players, have recorded a decline in production year-on-year while missing the annual target by a large margin. In this scenario, it remains to be seen if the government’s restructuring plan for ONGC will bear a positive change and arrest the decline in India’s crude oil production.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram. You may follow us on Twitter here and stay updated)

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