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Thu 26 Sep 2019 12:06 PM

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India set to increase oil imports amid declining domestic production

India's crude oil production has fallen by over 6 percent during April-August this year

India set to increase oil imports amid declining domestic production
A fall in crude production could mean India will have to make up the shortfall through increased imports if the current projected level of consumption continues.

India may be heading for more troubles on the oil front, with its domestic production of crude oil falling on a sustained basis this year, coupled with a possible spike in international crude prices in the wake of the recent attack on Saudi Aramco’s production facilities.

India’s crude oil production has fallen by over 6 percent during April-August this year compared to the corresponding period last year, according to the latest data released by the federal ministry of petroleum & natural gas.

A fall in crude production could mean India will have to make up the shortfall through increased imports if the current projected level of consumption continues.

With oil sector analysts anticipating a surge in crude prices internationally if the current disruption in supply persists, India’s import bill could see an unexpected increase this year, which will have adverse impact on the country’s current account deficit (CAD) and fiscal deficit, as also on domestic inflation rate.

Petrol prices have already seen a hike of Rs.2.7 (0.038 cent) per litre in the last 10 days in India, with oil marketing companies revising the prices on a daily basis at the pump level.

According to the ministry data, both the actual crude production and the targeted production level suffered a decline of 5.44 percent and 6.04 percent respectively in August this year, as against the same month of 2018.

The natural gas production in India also fell in the month of August by 3.58 percent, compared to the corresponding month of 2018. In terms of production target, the decline in August was higher at 7.18 percent.

On a cumulative basis during April-August 2019, the fall in production of natural gas was only marginal at 0.98 percent. The production, however, slipped by 5.49 percent from the targeted level for this period.

India’s leading producer of crude and natural gas, state-owned ONGC registered fall in the production of both crude and natural gas in August this year.

Crude oil production by ONGC during August was 1716.89 TMT, which was lower by 3.73 percent compared to the same month last year, while its cumulative crude oil production during April-August, 2019, at 8584.63 TMT, was 2 percent lower from the same period a year ago.

Issues related to electrical submersible pump (ESP) in the ONGC wells of NBP field and Ratna R-series, increase in water cut in certain wells of Heera, Neelam, Mumbai High and B173A fields and sub-sea leakage in of its well fluid lines of Mumbai High are said to be the reasons for the fall crude production by the Indian public sector oil producer.

The private and joint venture producers also registered a fall of 10.61 percent in their crude production in the first 5 months of the current fiscal, compared to the corresponding period of 2018.

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