While Covid-19 related delays are among the key reasons cited by producers behind lower production, India’s crude oil and natural gas production have been falling consistently since 2011-12.
India’s crude oil production fell by 5.2 per cent and natural gas production by 8.1 per cent in the FY21 as producers extracted 30,491.7 Thousand Metric Tonnes (TMT) of crude oil and 28670.6 Million Metric Standard Cubic Metres (MMSCM) of natural gas in the fiscal. While Covid-19 related delays are among the key reasons cited by producers behind lower production, India’s crude oil and natural gas production have been falling consistently since 2011-12.
Why is India’s crude oil and natural gas production falling?
Experts have noted that most of India’s crude oil and natural gas production comes from ageing wells that have become less productive over time. An industry source, who did not wish to be named, noted that “there was no more easy oil and gas” available in India and that producers would have to invest in extracting oil and gas using technologically intensive means from more difficult fields such as ultradeepwater fields.
Crude oil production in India is dominated by two major state-owned exploration and production companies, ONGC and Oil India. These companies are the key bidders for hydrocarbon blocks in auctions and were the only successful bidders in the fifth and latest round of auctions under the Open Acreage Licensing Policy (OALP) regime with ONGC bagging seven of the eleven oil and gas blocks on offer and Oil India acquiring rights for the other four.
Experts noted that interest from foreign payers in oil and gas exploration in India had been low. The government has asked ONGC to boost its investments in explorations and increase tie-ups with foreign players to provide technological support in extracting oil and gas from difficult oil and gas fields, a senior government official told The Indian Express.