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financial|freight|gas|petroleum

Indian crude oil import dependency surges to 84%

9th May 2019

By: Ajoy K Das

Creamer Media Correspondent

     

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KOLKATA (miningweekly.com) – Rising consumption and falling domestic production have increased India’s crude oil import dependency to 83.7% during 2018/19, compared with 82.9% during the previous financial year, data from the Petroleum and Natural Gas Ministry has showed.

Despite Prime Minister Narendra Modi’s ostensible target to cut India’s crude oil import dependency to 67% by 2022,  in reality it has been on an upward curve from 80.6% in 2015/16 to 81.7% in 2016/17 and 82.19% in 2017/18, government-released data indicates.

The rising import dependency is in direct correlation to domestic crude oil consumption rising from 184.7-million tons in 2015/16 to 194.6-million tons in 2016/17 and further to 206.2-million tons in 2017/18. During 2018/19, total domestic consumption was up 2.6% at 211.6-million tons.

This has been matched by falling domestic crude oil production over the past years, according to the Ministry data. India’s crude oil production was recorded at 36.9-million tons in 2015/16, falling to 36-million tons in 2016/17. Negative growth persisted with a further fall to 35.7-million tons in 2017/18 and 34.2-million tons in 2018/19.

In absolute monetary terms, the Indian crude oil import bill was estimated at $111.9-billion, up from $87.8-billion in the previous financial year. In the current year, the Ministry has projected crude oil imports to rise to 233-million tons, entailing an estimated bill of $112.7-billion.

However, it is believed that the estimated crude oil import volumes and bill for the current year have not factored in the impact of the US administration ending the sanctions waiver for Indian crude oil imports from Iran, the third largest source of Indian crude oil inward shipments.

Some analysts observed that the marginal 0.7% increase in the crude oil import bill forecast for the current year seemed “extremely conservative” considering the persistent downward bias of the Indian rupee exchange rate against the dollar. At the same time, with the US administration vowing to bring Iranian crude oil supplies to global markets to nil and Organisation of Petroleum Exporting Countries steadfast in not increasing production, import costs of crude oil in dollar terms are bound to strengthen in the current year.

Imports costs will also get an upward push even as India attempts to replace Iranian crude oil supplies with imports from newer sources like Brazil and Mexico entailing higher freight charges and shorter credit terms compared to offers from Iran till now, the analysts added.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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