India records lowest crude oil output in 9 years in April-July period

• The cumulative production figures for the April-July period is 19 percent lower when compared to 2012

• Data analysis showed that the crude oil output in India was impacted only marginally by COVID in the April-July period

New Delhi: In the backdrop of the government's call for Aatmanirbhar Bharat, India has recorded its lowest crude oil output in the April-July period in the last nine years, an analysis of official data shows. According to data sourced from the Ministry of Petroleum and Natural Gas, crude oil production in the April-July period of FY21 was 10,308.78 TMT, which was 6.08 percent lower than what was recorded in the corresponding period of the previous financial year. The cumulative production figures for the April-July period is 19 percent lower when compared to 2012.

Crude oil production during July 2020 was 2,633.59 TMT which is 4.94 percent lower than target and 4.89 percent lower when compared to July 2019. 

Data shows COVID has impacted production only by 6%

Data analysis showed that the crude oil output in India was impacted only marginally by COVID in the April-July period, as production dipped only by 6 percent when compared to the corresponding period of the previous financial year. In the April-July period of FY20, India had recorded crude oil output of 10,975.60 TMT. 

The numbers for the last nine years also showed that the decline in crude oil production has been steady. Since 2012, the production has declined every single year until 2020, except for a nominal increase in 2017 when compared with 2016. In the April-July period of FY17, the figure stood at 12,078.34 TMT and increased to 12,084.55 TMT, registering an increase of 0.051 percent.

How has ONGC fared?

Crude oil production by ONGC in nomination block during July was 1,738.56 TMT, which is 3.24 percent lower than the target but 0.42 percent higher when compared with July 2019. The cumulative crude oil production by ONGC during April-July period was 6,806.96 TMT, which was 2.42 percent and 0.89 percent lower than the target for the period and the production during the corresponding period of the last year, respectively. 

OIL records 8.48% drop in crude production y-o-y

Crude oil production by Oil India Limited (OIL) in July was 250.61 TMT, which was 5.99 percent lower than the monthly target and 8.48 percent lower than July 2019. The cumulative crude oil production by OIL during April-July was 997.0 TMT, which was 3.33 percent and 7.72 percent lower than the target for the period and the production during the corresponding period of the last year, respectively.

Private players & JVs fare worse off than PSUs

Crude oil production by private/JVs in the PSC regime in July was 644.42 TMT, which was lower by 8.86 percent than the monthly target and 15.64 percent lower than July 2019. The cumulative crude oil production by private/JVs during April-July was 2,504.81 TMT, which was 6.51 percent and 17.26 percent lower than the target for the period and production during the corresponding period of the last year, respectively. 

The backdrop

Over the years, in order to boost domestic production of crude oil, the government has opened the sector and made it more investor-friendly for the private sector. The Open Acreage Licensing Policy (OALP), which was launched in 2017, was heralded as a major change in policy in the exploration and production sector, as it brought in a number of bold changes. The new policy replaced the old system of government carving out areas and bidding them out. It guaranteed marketing and pricing freedom and moved away from production sharing model of previous rounds to a revenue-sharing model, where companies offering the maximum share of oil and gas to the government are awarded the block.

Also read: OALP Round 5 fails to attract private players; ONGC & OIL emerge top bidders

The Centre's idea behind bringing in the policy reform was that increased exploration will lead to more oil and gas production, helping the world's third-largest oil importer to cut import dependence. However, over the course of the last two rounds of bidding under the OALP regime, the private sector has been conspicuous by its absence. While Vedanta had walked away with 41 blocks in the first round, in round II and III, Vedanta won 10 blocks, while Reliance Industries got one. In round 4, ONGC won all the seven blocks on offer and in round V, ONGC got 7 blocks, and OIL won four. Only one private player submitted bids for the blocks on offer and was awarded one block. 

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