India's crude imports expected to rise

Oct 27, 2004 02:00 AM

Despite a marginal increase in India's crude output in September and during the first half of the current fiscal year to March 2005, there are concerns that the country will need to significantly increase oil imports over the long term to keep pace with burgeoning local demand.
India produced 1.5 % more crude oil in September than a year earlier, but still fell short of a government output target of 2.82 mm tons, according to official data. The country's crude output in September was 2.76 mm tons compared with 2.72 mm tons in the same month last year. In April-September, India produced 16.99 mm tons of crude oil, up from 16.30 mm tons in the first half of the previous fiscal year.

With no significant oil finds for many years and most of the major oil producing fields in the country already in decline, local energy analysts have little doubt that India will need to import increasing amounts of foreign oil.
"The rise in domestic crude output isn't significant enough. Unless there's a majoroil discovery in the country, India will remain vulnerable to global oil shocks and its dependence on imported crude will increase, as time goes by," said Jasprit Singh, an energy analyst with the domestic brokerage Prabhudas Lilladhar Securities.

India's annual crude output is beginning to plateau around 33 mm tpy, but demand for petroleum products is increasing at 5 % a year. Crude oil and petroleum products together are the biggest item in terms of value on India's import list. The country imports around 70 % of its crude oil, with more than 60 % of its imports coming from the Middle East.
"The increase in the local crude output should at be able to keep pace with the rise in demand for oil products. This is just not happening, and it's a matter of concern. India's crude imports are bound to show an upward trend," said Vidyadhar Ginde, an energy analyst with HSBC Securities.

India's crude oil imports during April-September totalled 51.1 mm tons, compared with around 47 mm tons during the same period a year earlier, a government source previously told.
India's crude oil reserves are sufficient to last about 20 years and natural gas reserves for another eight beyond that at current production rates if there are no new discoveries, according to the Indian government's energy agency, Directorate General of Hydrocarbons.

Source: Dow Jones
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