India's crude oil import bill surge 12% in H1 FY25 amid domestic slump

India’s crude oil import expenditure saw a 12 per cent rise during the first half of FY25, reaching $71.3 billion, compared to $63.7 billion in the same period of FY24, according to data released by the Petroleum Planning and Analysis Cell. 

Crude oil imports amounted to 120.5 million tonnes between April and September, representing a 4 per cent increase from the 115.9 million tonnes imported during the corresponding period last year, according to a Financial Express report.

In contrast, India’s crude oil import bill for September witnessed a 3 per cent drop, although import volumes surged by 6.3 per cent to 18.6 million tonnes compared to September 2023 figures.

 

The country’s reliance on imported crude oil climbed to 88.2 per cent during the first six months of FY25, up from 87.6 per cent in the same period of FY24, mainly due to growing demand and stagnant domestic production.

Decline in domestic production

Data showed that upstream companies produced 14.4 million tonnes of crude oil during April to September, down from 14.7 million tonnes during the same period in the previous fiscal year. September’s production also experienced a marginal decline, falling to 2.3 million tonnes from 2.4 million tonnes in the previous year.

Despite efforts by the government to boost production and reduce dependency on imports, crude oil production has remained relatively flat over the past decade, leading to increased import reliance.

Government introduces Bill to amend oil sector regulations

In a bid to stimulate the oil industry, the government recently introduced a bill in Parliament to amend the Oilfields (Regulation and Development) Act, 1948. The proposed changes expand the definition of mineral oils to include naturally occurring hydrocarbons such as coal bed methane, shale gas, and oil shale, among others. These amendments are designed to encourage greater participation from industry players.

The government also anticipates signing contracts for the upcoming 10th round of the Open Acreage Licensing Programme (OALP) based on the provisions outlined in the Oilfields (Regulation and Development) Amendment Bill, which is expected to pass during the winter session of Parliament.

Search for new suppliers amid rising geopolitical tensions

India’s growing import dependency comes at a time when geopolitical tensions, particularly in the Middle East, are escalating. In response, India has stepped up efforts to increase crude oil imports from Brazil. However, experts from S&P Global Commodity Insights suggest that logistical challenges and the availability of discounted Russian crude might complicate India’s attempts to secure more oil from the South American nation.

Puri recently visited Brazil to discuss enhancing crude oil imports and exploring collaboration opportunities in offshore deep and ultra-deepwater exploration and production projects. Brazilian exports to India have been relatively low in recent months, with crude imports from Brazil occurring in only five months of 2024. The peak import level was 41,600 barrels per day (bpd) in April, while December 2023 saw imports as high as 143,000 bpd, according to S&P Global Commodities data.

In July 2022, the Union Cabinet approved a $1.6 billion investment to develop an oil block in Brazil, a strategic move aimed at securing equity oil overseas and reducing dependency on foreign suppliers.