Crude oil output drops 5.4 per cent

Kolkata: India’s crude oil production dropped 5.4 per cent YoY in August. However an equal or marginally higher (5.5 per cent) import volume helped the country meet its consumption requirement. Significantly, India’s dependency on imported natural gas (NG) has increased indicated by stagnant domestic production and increased imports since 2008.

The production volumes of Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) in August declined 3.7 per cent YoY and 4.3 per cent YoY respectively, and that of fields under production-sharing contracts decreased 9.5 per cent YoY during the month. Meanwhile, the crude oil import volume in the same month increased 5.5 per cent YoY. India’s crude oil import dependency stood at 84.2 per cent in August 2019.

Going by the September 2019 edition of India Ratings and Research’s credit news digest on India’s oil and gas sector, the average LNG import share was 50 per cent of the overall domestic NG consumption during April-August 2019 and 46 per cent during FY19, as compared with 25 per cent in FY08.

According to Ind-Ra report, LNG imports increased at a CAGR of 8.7 per cent to 75 million metric standard cubic meter per day (mmscmd) in FY19 from 30 mmscmd in FY18 due to a sustained demand. The increased use of NG in fertilizer and power sectors coupled with growth of city gas distribution networks has driven the domestic NG consumption. On the other hand, domestic NG production has been stagnant at around 90mmscmd, at a CAGR of 0.2 per cent since FY08. This has led to increased reliance on the import of re-liquefied natural gas (RLNG), as domestic consumption has been gradually increasing.

On the pricing front, the price of Brent crude averaged $62.8 per barrel (bbl) during September 2019 as against $59.0/bbl during August 2019 and $78.9/bbl during September 2018. Further, the crude prices averaged 12.6 per cent YoY lower at $65.4/bbl during April-September 2019.