India’s import dependence on crude oil climbs to 87.8% in April-August 2023: PPAC, ET EnergyWorld

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New Delhi: India’s import dependence for crude oil has climbed to 87.8% during April to August 2023, compared to 86.5% in the corresponding period a year ago, according to data from the Petroleum Planning & Analysis Cell (PPAC) of the Ministry of Oil. This increase in reliance has occurred despite the domestic consumption of petroleum products rising over 5% to 95.6 million tonne in the same period.

The PPAC data further revealed that in August 2023 alone, the import dependence was 87.9%, up from 86.8% in August 2022. India, the world’s third-largest consumer of crude oil, imports the commodity to meet its rising domestic demand, particularly in the transportation sector.

In terms of volume, crude oil imports in the five-month period stood at 98.4 million tonne, down slightly from 99.0 million tonne during the same period in 2022. The value of these imports, however, decreased significantly from $77.4 billion to $52.7 billion.

According to the PPAC data, India’s oil import dependency was 87.4 per cent in 2022-23, 85.5 per cent in 2021-22, 84.4 per cent in 2020-21, 85 per cent in 2019-20, and 83.8 per cent in 2018-19.

Prashant Vasisht, Senior Vice President and Co-Group Head – Corporate Ratings, ICRA Limited, weighed in on the implications of this trend. “Long-term economic implications include vulnerability to an increase in the import bill and Current Account Deficit, depreciation of the Rupee versus USD, and an inflationary impact with an increase in crude oil prices,” said Vasisht. “Geo-politically, India remains dependent on certain countries or regions for meeting its energy requirements, which makes it vulnerable to oil price shocks if there are any tensions in these countries or regions.”

When asked about possible solutions to reduce dependency, Vasisht pointed to several strategies the Government of India (GoI) has initiated. “From March 2016, the New Exploration Licensing Policy was replaced with the Hydrocarbon Exploration Licensing Policy. From July 1, 2017, bidding for oil and gas acreage through an open acreage licensing policy was started to speed up exploration,” Vasisht explained.

However, despite these measures, domestic production of crude oil has not seen significant growth. “Additionally, electrification of transport, blending of ethanol in petrol, and production of compressed biogas are other ways to reduce imports of crude oil. However, for electrification, the costs of batteries and EVs have to come down for wider adoption,” Vasisht added.

  • Published On Sep 21, 2023 at 07:12 AM IST

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