Data | India’s downturn in domestic crude oil production persists

India depends on imports to meet 85% of its crude oil needs, and its ageing oil wells are a major hiccup in the country’s ambition to reduce import reliance

Updated - June 04, 2022 01:16 pm IST

Published - June 03, 2022 05:15 pm IST

MUMBAI: (File Photo) off-shore oil rigs of ONGC Sagar Shakti.   
Photo: Paul Noronha

MUMBAI: (File Photo) off-shore oil rigs of ONGC Sagar Shakti. Photo: Paul Noronha | Photo Credit: PAUL NORONHA

India’s domestic crude production has been on a consistent decline. In FY22, it slipped to 28.4 MMT, the lowest in over two decades. Despite being the third-largest consumer of oil, the country depends on imports to meet 85% of its needs. High reliance on imports has inflated India’s crude import bill and widened the trade deficit. State-owned ONGC, which accounts for a bulk of domestic crude production, has seen its output decreasing steadily. One major hiccup in India’s ambition to reduce import reliance has been its ageing oil wells. Production has been hampered significantly as output from mature wells has reduced and there have been no new major discoveries.

Falling output

The chart shows India’s year-wise domestic crude oil production. Crude output has been consistently falling since FY15. In FY22, India’s crude production fell to 28.4 MMT (million metric tonnes), the lowest in at least 24 years. Hover over the chart to find the exact figure

Chart appears incomplete? Click to remove AMP mode

Import dependence

Over time, India’s crude consumption soared, but the country failed to augment its domestic production. This led to higher reliance on imports. In FY22, India’s crude oil import bill ballooned to $120.4 billion as the crude prices surged. A higher import bill is detrimental to the macroeconomic situation as it widens the trade deficit

ONGC’s woes

The chart shows state-owned ONGC’s year-wise crude oil production. ONGC dominates India’s crude oil production. However, its output has been on a decreasing trend. In FY22, it produced 19.45 MT of crude, which was the lowest since FY12. It also fell short of its target by 13.8%

Ageing wells

The primary reason for declining crude output is India’s dependence on ageing wells and no major discoveries. Chart A shows the number of new oil wells and dry wells. Chart B shows the number of wells dug for development and exploration

Chart A

The number of new dry wells has been increasing significantly while new oil wells have failed to ramp up India’s production

Chart B

The number of new wells dug declined in both cases: development (maximising known reserves) and exploration (locating reserves of oil)

Source: PPAC, CMIE, MOPNG

Also read: Explained | The surge in oil and natural gas prices

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