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Domestic crude output shrinks 4% in 11 months

Domestic crude oil output shrank 4% in the eleven months through February from a year earlier, continuing the declining trend for the seventh fiscal year in a row and pushing up India’s dependence on imports.

 Imports met 83.8% of local oil needs during April-Feb of 2018-19, up from 75.9% in 2011- 12. Local production began falling in 2012-13 and has declined every year since despite billions of dollars of investments in sustaining production from ageing fields and finding new sources of oil.

 In early 2015, Prime Minister Narendra Modi set a target of cutting import dependence to 67% by 2022. Following this, the government drew up a plan to raise local output and expand the use of substitutes like natural gas and biofuels to bring down imports.

The official measures are yet to show much impact.

During April-Feb this fiscal year, domestic oil production fell to 31.35 million metric tonnes (MMT), a 4% decline from the same period last fiscal year. ONGC, the country’s largest oil producer, saw oil production drop 5.4% while Oil India’s output shrank 2.6%. Fields operated by private players also reported 1.3% lower output.

At the heart of the problem are depleting fields and companies’ inability to make any major oil discovery for years that could substantially alter the country’s production profile.

Operational problems such as the absence of rig or malfunctioning equipment system, sub-sea leakage in some fluid lines of Mumbai High and Neelam Heera fields, and underperformance in some Gujarat fields contributed to lower production by ONGC, Oil Ministry’s monthly production report said.

Underperforming wells have been blamed for OIL’s lower output. 

Delayed upgrade of Mangala Processing Terminal, delayed drilling, and closure of nearly 100 wells due to liquid handling constraint at the terminal and other technical limitations have affected production at Vedanta’s prolific Barmer block in Rajasthan, as per the official report. 

Crude oil imports rose 2.6% during April 2018-February 2019 from a year earlier. Import of petroleum products decreased 6.5% during the same period, primarily due to lower imports of diesel and petcoke, a dirty fuel that’s being discouraged in the country. Exports of petroleum products fell 9.7% during April 2018 – February 2019 due to lower exports of petrol, naphtha, diesel and fuel oil. 

 

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