India’s Growing Reliance on Imported Crude Oil
India’s dependence on imported crude oil has continued to rise, with a significant increase of 6.4% in August compared to the same month the previous year. This surge underscores the mounting pressures on India’s energy security amidst the backdrop of rising global oil prices. According to the Petroleum Planning & Analysis Cell (PPAC) under the Ministry of Petroleum & Natural Gas, domestic oil production, on the other hand, witnessed a decline of 2.9%.
Increase in Import Bill
The latest report from the PPAC revealed that India’s total net import bill for oil and gas in August 2024 stood at $11.4 billion, witnessing a growth of $2.4 billion from the corresponding period in 2023 when it was $9.0 billion. The spike in the import bill can be attributed to higher imports of liquefied petroleum gas (LPG), petcoke, and lubricants.
Growing Demand and Economic Recovery
The data from April to August 2024 indicates a steady rise of 3.3% in crude oil imports, indicating a growing demand as India’s economy rebounds from the impact of the COVID-19 pandemic. This heightened demand highlights the need for India to focus on bolstering its domestic output to reduce reliance on the historically unstable global markets.
Challenges in Domestic Production
The indigenous production of crude oil and condensate faced several challenges in August 2024, resulting in a worrisome 2.9% decrease. Companies such as Oil India (OIL) and Oil and Natural Gas Corporation (ONGC) reported lower outputs, reflecting the ongoing struggle to enhance domestic production. Prioritizing domestic operations is crucial to decrease India’s dependence on external markets and stabilize its energy requirements.
Refining Sector Decline and Recovery
The challenges faced by the domestic production of oil and gas were mirrored in the refining sector, which experienced a decline of 1.9% in total crude oil processed during August 2024 compared to the preceding year. Despite this monthly setback, the sector did record a slight increase of 1% in processed crude from April to August 2024 when compared to the corresponding period in the previous year. This suggests a tentative recovery in refining operations.
Conclusion
While India’s reliance on imported crude oil continues to intensify, the decline in domestic oil production and refining highlights the urgency to emphasize the enhancement of domestic capabilities. By investing in the domestic oil and gas sector, India can reduce its dependence on foreign markets, ensuring long-term energy security and stability in the face of fluctuating global prices. Furthermore, initiatives focused on renewable energy and energy efficiency should be prioritized to mitigate risks and diversify India’s energy sources.
