With the domestic demand of petroleum products on the rise, output from the local oil and gas fields much below expectations, the refiners are left with little option but to depend on expensive imports.
In September, to meet the 2.8 per cent increase in petroleum products consumption the domestic refiners imported 11 per cent more crude oil at 14.42 million tonne year-on-year.
According to the Petroleum Planning & Analysis Cell, the consumption estimates represent the market demand and is aggregate of sales by oil companies in domestic market and consumption through direct imports by private parties. While the data for company sales are actual, that of private direct imports are estimated, it said.
The refiners (18 public sector and two private sector) turned 11.4 per cent more crude oil into products in September at 14.129 million tonne annually, according to a data released by the Ministry of Petroleum & Natural Gas here on Thursday.
Reliance Industries does not share planned targets and production data for its export-oriented refinery in Jamnagar.
Higher demand also means dependence on expensive imported oil and gas. Affected by the volatility in interaction crude oil pricing, consumers have been demanding that the producing nations take corrective measures, an industry observer said.
Voicing a similar concern, the Petroleum Minister S. Jaipal Reddy, addressing the World Energy Forum in Dubai on October 23, had said “At a global level, there is huge inequity among nations in terms of prices of both oil and gas.”
“The price difference between Brent and West Texas Intermediate (two benchmark prices) has been, at times, as much as $25 per barrel. Further, Governments in developing countries, including India, cannot reduce subsidies below a point since they have to be sensitive to the minimum needs of poor people,” the Minister had said.
Reddy said that another troubling phenomenon is the increasing role of speculation and paper barrels which contributes to sustained high prices. “This neither helps the producers nor the consumers of oil and gas,” he added.
The domestic crude oil output in September was down 1.7 per cent annually mainly because of almost 11.2 per cent decline in output from the offshore fields. The output from ONGC’s Mumbai High Fields fell 7.8 per cent year-on-year.
The country’s natural gas output has fallen for the 22{+n}{+d} straight month in September mainly because of continued drop in production from the country’s largest gas fields in the East coast operated by, Reliance Industries. The gas production from offshore fields including D6 fell by almost 17.5 per cent in September year-on-year.