India’s consumption of petroleum products posts 4% growth y-o-y, while domestic output dips 7%.
India’s crude oil import surged 10.5% to 21 million tonne (MT) in October 2018—a seven-year high — compared with 19 MT a year ago, in turn pulling up the country’s crude oil import dependency to 83.5%, according to data from Petroleum Planning and Analysis Cell. While on the one hand, India’s consumption of petroleum products registered a year-on-year growth of 4% during the month given the demand surges during the festive season, on the other, production from domestic oilfields declined 7%.
At the same, the country imported 20% less petroleum products during the month and exports, too, fell 4%. India’s increased dependance on oil imports is in contradiction with the country’s planned roadmap to increase self-sufficiency. In March 2015, Prime Minister Narendra Modi had called for a time-bound reduction in India’s onerous import dependence for oil and gas. He set a target for the stakeholders to reduce the country’s import dependence for oil from around 77%, then to 67% by 2022 and 50% by 2030, with a commensurate increase in domestic production.
The country’s overall import is estimated to be 228.6 MT in FY19, up 3.6% from 220.4 MT in FY18. However, in terms of value the import bill is estimated to increase 55% to Rs 8.8 lakh crore in the current financial year compared with Rs 5.7 lakh crore in FY18. While the crude oil prices have come down to around $63 per barrel now, it had gone above $85 by October. Adding to the woe, the Indian rupee has also weakened by 8.9% against the dollar in the last one year. A change of $1 per barrel in crude oil price affects India’s crude oil bill by Rs 6,158 crore whereas a currency fluctuation of Re 1 per dollar affects the bill by Rs 6,639 crore.
“Given the current turmoil in the global economy; the looming tariff wars between the US and China, the unilateral sanctions imposed by the US government on Iran and supply outages from Libya and Venezuela oil prices have risen sharply by 40.3% y-o-y (January-October period),” CARE Ratings said in a recent report. However, sanity returned to market starting November after the US gave partial waiver to eight countries, including India, to import crude oil from Iran till March.
Natural gas production from domestic fields in October, 2018 remained flat year-on-year at 2,798 mmscm compared with 2,808 mmscm a year ago. The silver lining has been that the import dependance on import during the month went down to 45.6% compared with 46.9% a year ago.