At a time when high international crude oil price is directly impacting India’s GDP, inflation and current account deficit, the crude oil production back home paints a gloomy picture. India’s crude oil production has fallen continuously for at least six years in a row. The crude oil production, which was 38.1 million metric tons in 2011-12, slumped to 35.7 million metric tons provisionally in 2017-18, latest data by Petroleum Planning & Analysis Cell showed. But wait, there’s an explanation.
The fall in crude oil production coincided with the years in which oil prices slumped. Fall in production can be attributed to the lack of efficient production and drilling from matured oil fields, but primarily due to lack of investment as low crude oil prices rendered investments into oil fields unattractive, Urvisha H Jagasheth, oil analyst at Care Ratings told FE Online.
As the oil prices are up again, the country can expect more investment in the oil production business. Moreover, the Hydrocarbon Exploration and Licensing Policy (HELP), which was passed in March 2016, will also help in enhancing domestic oil production and bring substantial investment in the sector. However, the rate at which domestic oil consumption is rising, oil production has to rise too and if the investment does not come even now, we should be “looking at the alternative source of energy”, Urvisha H Jagasheth added.
The silver lining is that India’s gas production has finally ditched the negative territory after years and shown positive growth in the fiscal year 2017-18. India’s gas production growth rate, which was -14.4% in 2012-13, swung to 2.9% in 2017-18.
India ranks 24th in oil production globally and produces 15% of the crude oil that is consumed domestically. ONGC and Oil India and private companies such as Reliance Industries, Cairn India, Essar Oil, Gujarat State Petroleum
Corporation, Jubilant Oil and Gas, Focus Energy, Naftogaz and others explore and produce oil in India. Many upstream oil companies are also making bids to acquire portions of oil fields in other countries. ONGC Videsh — an international arm of ONGC — has acquired stakes in oil fields located in Russia, UAE, Vietnam, Azerbaijan, Myanmar, Brazil, Colombia, Venezuela and Sudan.