Production of crude oil, which accounts for roughly one-fourth of India’s gross imports, has declined by 3 per cent per annum in the last seven years, ending FY24.
The declining production and rising consumption has increased India’s import dependence from 86 per cent in FY17 to 89 per cent in FY24.
These findings are part of the India Energy Scenario FY24 report, which provides granular data of India’s procurement, production and consumption. It is brought out by the Bureau of Energy Efficiency (BEE) under the Power Ministry.
In FY24, India’s total primary energy supply was 910 Mtoe (million tonnes of oil equivalent), with 60 per cent from coal, 28 per cent from oil, 7 per cent from gas and 5 per cent from non-fossil energy sources.
Declining production
“In FY24, the domestic produce of oil in the country was 29.4 million tonnes (mt), decreasing significantly from 36 mt in FY17, declining at the annual rate of 3 per cent,” the report pointed out.
It has attributed the decline in crude oil output to several factors, including natural depletion of older and marginal fields, accessibility and technical challenges in certain reservoirs, disruptions in field activities, etc.
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To arrest this, the government has implemented several long-term and short-term initiatives such as the Hydrocarbon Exploration and Licensing Policy (HELP) 2019, induction of suitable technologies on selective fields, monetisation of small and marginal discoveries in onshore through service contract and outsourcing, it added.
State-run companies, ONGC and Oil India (OIL), contributed around 65 per cent and 11 percent, respectively, in 2023-24. The remaining 24 per cent of crude oil is produced by the Production Sharing Contracts (PSC) or Revenue Sharing Contracts (RSC) regime.
In a January 2025 report, Fitch Ratings said “We expect India’s crude oil production to fall by 2-3 per cent in FY25 (7M FY25: -3 per cent). The fall reflects the ongoing struggle of companies like ONGC to arrest the natural output decline at mature fields through technology investments to raise recovery and tap isolated reservoirs.”
However, production should grow by low single-digit percentages in FY26, as production increases at ONGC’s offshore field in the KG Basin, and at privately owned fields.
India’s estimated balanced recoverable crude oil reserves in the country was 671.4 mt as of April 1, 2024, reflecting a 0.3 per cent increase from the previous year’s reserves at 669.47 mt.
Rising imports
Fitch Ratings expects India’s crude oil import dependency to continue rising in the near term, driven by faster growth in petroleum product demand than in domestic crude oil production.
The world’s third largest crude oil importer procured 234 mt of the commodity in FY24. The country’s imports accounted for 86 per cent of crude oil supply in FY17, rising to 89 per cent by FY24, albeit experiencing a temporary decline during the Covid-19 pandemic in FY21 and FY22, the report pointed out.
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Historically, India relied on the Middle East for its crude oil supply. However, its share of total crude oil imports has decreased from 64 per cent in FY18 to 46 per cent in FY24. In contrast, imports from Eurasia, which is largely Russia, leaped from 3 per cent in FY18 to 39 per cent in FY24.
Higher imports reflect the country’s growing usage of refined petroleum products. India had a refining capacity of 256.8 Million Tonne per annum (mtpa), as of April 1, 2024, which makes it the world’s fourth-largest refiner after the US, China and Russia.
Production of petroleum products increased from 244 mt in FY17 to 276 mt in FY24, with a 2 per cent annual increase over the last seven years.
Import of petroleum products rose annually by 4 per cent, while exports declined by 1 per cent due to rising domestic demand during the same period.
