Indigenous crude oil production caters to about only 15% of the country’s requirements, while for natural gas, 51% of requirement has to be imported.
The Domestic natural gas production fell 18.9% to 2,155 million metric standard cubic metre (MMSCM) in April. The 2.5 million tonne (MT) of crude oil produced in the country in the month was also 7.7% lower than the production from a year-ago period. The development coincides with domestic consumption of petroleum products falling 46% y-o-y to 18.3 MT in April, when the lockdown to contain the spread of the coronavirus was implemented throughout the month.
Indigenous crude oil production caters to about only 15% of the country’s requirements, while for natural gas, 51% of requirement has to be imported. Domestic natural gas output fell 5.2% y-o-y to 31,166 MMSCM in FY20, reversing the growth trend recorded since FY18. Also, the 32.1 MT of crude oil produced in the country in the fiscal was 1.2% lower than the output from a year-ago period.
Domestic production has been falling with the ageing of existing fields and muted response from the industry to take up new projects, mainly due to lack of adequate incentives. Other reasons for lower output in FY20, as admitted by the government recently to a parliamentary committee, include lack of buyers, inadequate evacuation infrastructure, technical constraints in hostile geographical terrains and protests against the Citizenship (Amendment) Bill in upper Assam oilfields. Lack of environmental permissions is also making new drilling difficult.
As FE recently reported, the government has decided to revise the production sharing contracts (PSC) of private oil producers. In this regard, the Union ministry of petroleum and natural gas has formed a committee which would also ‘suggest ways of attracting investment in exploration, enhance production and eliminating obstacles’. PSC fields contribute about 26% of the country’s crude oil production.