Home >Industry >Energy >Indian oil firms’ domestic crude production slips

New Delhi: In what may further dampen India’s energy security plans, crude oil production from the fields of the state-owned Oil and Natural Gas Corp. Ltd (ONGC) and Oil India Ltd (OIL) dropped 5.4% and 1.6%, respectively, in the April-December period.

Oil production for ONGC fell to 16,952 thousand metric tonnes (tmt) in April-December from 17,928 tmt in the year-earlier period, according to the Petroleum Planning and Analysis Cell (PPAC), which functions under India’s ministry of petroleum and natural gas. The fall was mainly due to declined production at ONGC’s Mumbai High and Neelam-Heera fields.

Production for OIL dipped to 2,838 tmt in April-December from 2,885 tmt in the year-ago period, according to the PPAC report reviewed by Mint.

Improvement in production from these state-owned firms’ assets is important given the limited supplies from India’s domestic energy sources and the country’s dependence on imports—as high as 80% for crude and 25% for natural gas. India’s energy demand is expected to more than double by 2035, from less than 700 million tonnes of oil equivalent (mtoe) today to around 1,500 mtoe, according to the oil ministry.

Questions emailed to spokespersons of ONGC and OIL on Thursday remained unanswered.

While output from production-sharing contract (PSC) fields increased 12.4% to 8,854 tmt in April-December from 7,878 tmt a year ago, India’s total domestic crude production dipped 0.2% to 28,644 tmt in the same period. Concerns have been raised about the production capabilities of state-owned firms and the need to find new reserves. “The domestic oil production has been almost flat over the years due to limited prospects, delays in commissioning of projects and declining production from existing maturing fields," according to a PricewaterhouseCoopers India Pvt. Ltd report titled Rising above the sub-optimal: Exploring ways to find energy solutions for Federation of Indian Chambers of Commerce and Industry—a lobby group.

A case in point being ONGC. Most of the firm’s domestic fields are more than 30 years old, and while ONGC’s domestic reserves increased from 1,243 mtoe in 2010-11 to 1,287 mtoe in 2011-12, production dipped from 52.6 mt to 52.4 mt in that period.

The explorer has been scouting for opportunities to plug technology gaps and leverage the strengths of large oil firms. According to its Perspective Plan 2030, it aims to unlock more than 450 mtoe from so-called yet-to-be-found reserves. The firm is targeting production of more than 130 mtoe in 2030, of which half will come from ONGC Videsh Ltd, its overseas arm.

This comes in the backdrop of projections of growing energy demand from countries such as India, the world’s fourth largest energy consuming nation.

India, China and West Asia will account for 60% of the world’s energy demand by 2035, when the price of imported crude will be $215 a barrel in nominal terms, the International Energy Agency (IEA) said in its World Energy Outlook 2012.

“Oil demand reaches 99.7 mb/d (million barrels per day) in 2035, up from 87.4 mb/d in 2011, and the average IEA crude oil import price rises to $125/barrel (in year-2011 dollars) in 2035 (over $215/barrel in nominal terms)," the world’s premier energy monitor said in its report.

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