Prime Minister Narendra Modi’s wish of a 10 per cent cut India’s oil import dependence by 2022 is unlikely to be accomplished, according to S&P Global Platts.

Sambit Mohanty, Senior Editor of S&P Global Platts, said , “We don’t agree with the fact that India can sharply reduce (crude oil) imports. We still import more than 80 per cent of our crude oil needs. Given the fact that oil product demand is growing at nearly 8 to 9 per cent, we cannot see how we can substantially reduce imports of the feedstock.”

Mohanty who is the lead author of report on India’s infrastructure requirements and commodity projections titled “‘Make in India’, A new window of opportunity for commodities” spoke to BusinessLine at the launch of the report here on Thursday. Commenting on the auction of discovered small fields and the subsequent projections of increased domestic crude oil production, Mohanty said, “We strongly feel that the possibility of boosting crude oil output is extremely limited.”

The regulated prices especially in natural gas is going make it extremely hard for production to get a boost, he said adding that, “The dependence on imports is continuing to grow as demand for products is expected to grow at 7 to 8 per cent annually over the next few years across six products (jet fuel, kerosene, naphtha, LPG, gasoline and diesel). Bulk of the demand will continue to be met by imports.”

The Platts report also says that the reforms to pricing policies have so far been insufficient to boost domestic gas production, suggesting that India’s gas import gap is going to increase rapidly. The report states, “This will favour LNG as proposed international gas pipeline projects face major political and financial challenges.”

Insufficient investments

Platts notes that the declining trend in production is the result of insufficient levels of upstream investment, ageing fields and the low level of regulated prices, which acts as major disincentive. Any upturn in exploration and production activity depends on the success of new policy measures instituted by the government, particularly with regard to pricing for deepwater and ultra-deepwater developments.