India’s oil import bill is expected to shoot up following a terror attack on the Saudi Aramco refinery and the resultant jump in global crude prices. India is vulnerable to price fluctuations as it imports 80% of its oil requirements, as domestic crude production has failed to keep pace with the needs of the fast-growing economy.
To make things worse, almost half of its oil imports come from the troubled West Asian region. India produced 342 lakh tonne of crude oil in 2018-19 compared with 340 lakh tonne in 1988-89, according to RBI data. Its crude imports shot up over 400 per cent from 60 lakh tonne to 325 lakh tonne during the period. The country’s crude output has been contracting for the last seven years.
Reasons for shrinking domestic oil output
Technical problems such as faults in submersible pumps in some wells, sub-sea leakage in some fluid lines, loss of production due to reduced enhanced oil recovery effect, less than planned realisation from new wells and increase in water cut in certain wells are the reasons for the stagnation in oil production in the country. Read More
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