Crude oil output costs to rise by $1 per barrel on Union Budget move

Removal of duty exemptions on chemicals may lead to annual rise of $40 mn

The removal of duty exemptions for chemicals essential to crude production in the latest budget, has raised production costs by $1 per barrel, and led to an annual cost increase of about $40 million, officials at upstream companies said.

Specific chemicals used for enhanced oil recovery (EOR) in ageing fields, have seen duty exemptions being removed, they stressed. One such chemical is Partially Hydrolyzed Polyacrylamide (HPAM), a widely used polymer in the oil and gas industry.

It works by increasing the viscosity of the injected water in oil wells, thus improving its mobility and oil recovery. "Due