India's dependence on crude oil and gas imports burgeoned as refiners expanded capacity and there was no immediate indication of increase in domestic output, says a BL report.
The domestic refiners imported 5.8 percent more crude oil in May year-on-year at 14.586 million tonnes or 3.45 million barrels a day of oil (against 13.784 million tonnes in May 2011). The refining capacity of the country has grown to nearly 215 million tonnes today, noted the report.
Diesel and LPG pushed petroleum product consumption in May this year by 5.4 percent year-on-year. While diesel sales showed an upward tick of almost nine percent in May, petrol consumption was down 4.6 percent year-on-year. The rise in diesel consumption was driven by the price differential with petrol, extreme summer seasons and power cuts leading to usage of generators, the report pointed out.
Crude oil production saw only a miniscule increase of 0.5 percent annually, according to data released by the Petroleum and Natural Gas Ministry. The country’s natural gas output has declined for the 18th straight month in May by 10.8 percent, the report said.
The total domestic gas production is about 115 mmscmd, and demand-supply is about 165 mmscmd. The gap is met through imports. The drop in output from Reliance Industries-operated Krishna Godavari Basin D6 block, which is the major source of natural gas, pulled down the domestic gas output. The D6 block is currently producing about 30 mmscmd of gas, the report continued.
Inadequate indigenous production meant higher dependence on more expensive imports. The imports depend upon the demand, price, and alliance with the suppliers, industry observers were quoted as saying by the report. Domestic refiners processed 2.9 percent more crude oil in May annually. This was mainly driven by private sector players – Essar Oil and Reliance Industries – who turned 8.9 percent more fuel into products. Reliance Industries does not share data for its second refinery in Jamnagar, which is an export-oriented refinery, added the report.