India's crude oil production remains weak during April-November 2014

Production to increase in 2015-16

Crude oil production in India fell by 0.2 per cent in 2013-14. The fall in production continued
even during the first eight months of the current fiscal. Crude oil production in the country
declined by 1.6 per cent to 24.8 million tonnes during the period. Delay in execution of new
projects, ageing oil fields and bandhs and blockades in Assam impacted overall crude oil
production. The state-run as well as private & joint venture (PV/JV) companies reported a fall
in crude oil production during the period.
Besides, Indias crude oil imports also declined by 3.7 per cent during April-November 2014.
India imports more than 80 per cent of its crude oil requirement. Due to a feeble production
and a fall in imports, throughput of some refining companies (major consumers of crude oil)
fell during the period. This dragged down the overall refinery throughput in the country.
Indias refinery throughput declined by 0.4 per cent as against a growth reported during the
year-ago period. In 2014-15 as a whole, crude oil production is expected to grow by a measly
0.3 per cent and imports by 0.4 per cent.
However, expected robust investments in the industry are likely to improve crude oil
production in 2015-16. We expect the production to grow by 3.8 per cent to 39.3 million
tonnes during the year. The growth will mainly be contributed by Oil and Natural Gas
Corporation (ONGC) and PV/JV companies. Also, crude oil imports are expected to rise by 5.7
per cent during the year. This would be on the back of a probable increase in demand from
refineries. Refining capacity in India is expected to surge by 21 million tonnes in 2015-16.
Besides, low crude oil prices are also likely to support the growth in imports in 2015-16.
International crude oil prices have been declining since July 2014 on account of oversupply.
The boom in USAs shale oil output and the OPECs (Organisation of the Petroleum Exporting
Countries) decision not to curb production has resulted in oversupply of crude oil in the
international market. Crude oil prices of the Indian basket fell from USD 109.2 per barrel in
June 2014 to USD 46.9 per barrel in January 2015. We do not expect supply scenario will
change much in the near future. Hence, the crude oil prices are likely to remain under
pressure even in 2015-16.