India's crude output to continue downhill trek for 25 years

1. India's Crude Output to Continue
Downhill Trek for 25 Years
Import dependence to grow to 90% by 2040 on low-quality reserves,
poor policy response

2. Contd…
India's crude oil production will continue to fall in the next quarter century
despite the government's ambitious targets, declining to less than half the
current output as new reserves fail to compensate for the decay in existing
fields, the International Energy Agency has said.The Modi government has
set a target of cutting oil import dependence by 10% in next seven years as it
hopes to reverse the decline in domestic oil output through a slew of policy
measures, fresh investments and technological interventions.
But the Paris-based agency has poured cold water over the government's
plan, underlining in its `India Energy Outlook' report that low-quality
reserves and insufficient policy responses will make the country more
dependent on imports.
By 2040, India's imports will rise to 90% of the overall oil demand, from 70%
at present, according to the IEA.

3. Contd…
India's crude oil production fell marginally in 2014-15 and was about the same in
the seven months of the current fiscal as that a year-ago period.
Crude oil production will fall 3.5% annually to 0.3 million barrels a day (mbd) in
2040 from 0.7 mbd in 2013, as per the IEA, turning India into the secondlargest oil
importer, behind China. During this period, oil demand in India will grow 4.6%
annually, as per the projection.
“The boost to output due to discoveries in Rajasthan subsides by 2020 and,
although additional onshore discoveries of the magnitude seen in Rajasthan are
not excluded, neither these nor the envisaged development of new reserves from
the offshore basins are sufficient in the Outlook to outweigh the effects of declining
production from existing fields,“ the report said.
The oil block in Rajasthan, operated by Cairn India, contributes about a quarter to
the country's crude output. Most other contributions come mainly from the fields
operated by state-run Oil and Natural Gas Corporation and Oil India.

4. Contd…
Proven reserves of 5.7 billion barrels against an annual crude demand of 1.4 billion barrels,
and increasing every year, underline the “stark“ mismatch between domestic resources
and needs of the country, the agency said.
India's record in attracting big investments to the upstream sector has been dismal. Of the
254 blocks awarded under the New Exploration and Licensing Policy in about 15 years, only
128 discoveries have been made and 11 fields developed.
BP is perhaps the only global oil firm currently invested in the upstream sector.
The government has just announced new financial terms to attract developers for 69
marginal fields set to be auctioned next year, and plans to replicate these terms in its policy
being finalised for major blocks. But low oil prices can dampen investor interest.
“Getting the incentives right for an increase in exploratory activity, through sufficiently
attractive licensing and pricing arrangements, may have only a limited effect on India's oil
balance, but it could have a much more significant impact on the domestic gas supply,“ the
agency added.

5. Contd…
Petrol Cheaper by 58plitre, Diesel 25p
Oil firms have cut petrol prices by 58 paise per litre and diesel by 25 paise in
Delhi in line with changes in international rates and the exchange rate, which
has made the landed price of imports cheaper.
The new prices will be effective Tuesday.
Petrol will now cost ` . 60.48 per litre while diesel will be re . 46.55 in Delhi,
Indian Oil Corporation said in a statetailed at ` ment. “The current level of
international product prices of petrol and diesel and INR-USD exchange rate
warrant a decrease in prices, the impact of which is being passed on to the
consumers with this price revision,“ the company said.
Oil prices have fallen 60% since last year due to a supply glut in global market
and the decision of oil cartel OPEC to not cut supply so that its high-cost
rivals suffer in the long run.

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