India’s domestic crude oil slips to 28-year low in FY22

In FY22, India’s crude production fell to 28.4 MMT (million metric tonnes), the lowest in at least 24 years

The monthly production report for June 2022 of the Ministry of Petroleum and Natural Gas Crude oil production during June 2022 was 2439.32 TMT. This was 3.01 percent lower than the target for the month and 1.71 percent lower than the production of June 2021. Two of the biggest state-run energy company, ONGC, and Oil India could not achieve their targets. Crude oil production by ONGC in the nomination block during June 2022 was 1625.29 TMT, which was 1.11 percent lower than the target of the month, while Oil India could produce 257.17 TMT during the same period, 6.39 percent lower than the target. Crude oil production by private companies also reported a decline in their production.

Source: Ministry of Petroleum and Natural Gas

Apart from crude oil, Natural gas production also saw a decline. Production in June 2022 was 2812.78 Million Metric Standard Cubic Meters (MMSCM), which is 1.85 percent lower than the monthly target but 1.29 percent higher than the production of June 2021. Cumulative natural gas production during April-June 2022 was 8553.16 MMSCM, which is 2.63 percent lower when compared to the target for the period but 4.71 percent higher than production during the corresponding period of last year.

Falling output

The below chart shows India’s year-wise domestic crude oil production. Crude output has been consistently falling since FY15. The volume of crude oil production in India in the financial year 2021 amounted to about 30.5 million metric tons. In FY22, India’s crude production fell to 28.4 MMT (million metric tonnes), the lowest in at least 24 years.

One major hiccup in India’s ambition to reduce import reliance has been its aging oil wells. Production has been hampered significantly as output from mature wells has reduced and there have been no new major discoveries. This has been despite the government approving major reforms to enhance exploration activities. Since 2016, six bidding rounds under the New Exploration Licensing Policy have so far been finalised with 105 exploration blocks being awarded covering an area of approximately 1,56,579 sq. km.

In 2015, PM Narendra Modi had said the country should cut oil imports by 50 percent by 2030. But given the slow pace of progress so far, there is not much hope of the targets being achieved.