India’s dependence on crude oil imports is on the rise, reaching a new high of 87.8% in the fiscal year 2023-24 and expected to increase further in the current fiscal year.
Despite significant discounts offered by Russia on its oil exports, India’s reliance on imported crude has surged, driven by escalating demand for petroleum products and stagnant domestic production. In April 2024, India imported 21.4 million tonnes of crude oil, marking a 7% increase from the corresponding period last fiscal year. This elevated dependency pushed the country’s reliance on crude oil imports to 88.4% for the month, as reported by the Petroleum Planning & Analysis Cell (PPAC) of the oil ministry. Although India benefitted from substantial discounts on Russian oil exports in the previous fiscal year, with the import bill witnessing a decline, April 2024 saw a 19% increase in the import bill, reaching $13 billion compared to the previous year. The narrowing discounts offered by Russia, coupled with its status as a primary crude oil supplier to Indian refiners following the Russia-Ukraine conflict, contributed to the surge in import costs.
According to industry experts, Russian discounts on crude shipments have decreased significantly, from $8-10 per barrel to $3-4 per barrel, resulting in reduced cost savings for India. Consequently, the estimated savings on oil imports have dwindled from $5.8 billion in the initial months of the fiscal year to $2.0 billion in the subsequent period. Despite efforts to bolster domestic production through initiatives like the Hydrocarbon Exploration and Licensing Policy (HELP), aimed at enhancing exploration and production activities, oil production in India has remained stagnant. While deepwater exploration projects such as the Krishna-Godavari basin have shown promise, they have yet to significantly impact overall oil production.
India’s consumption of petroleum products, including gasoline, diesel, and jet fuel, witnessed a notable increase in April 2024, rising by 6% compared to the previous fiscal year. With imports of petroleum products also on the rise, India’s quest to reduce oil import dependency faces significant challenges.
India’s aspirations to reduce reliance on oil imports amidst growing demand and stagnant domestic production highlight the complexities of the country’s energy landscape. Despite strides in exploration and production, achieving self-sufficiency in oil remains a formidable task.
