The country's dependence on crude oil and gas imports grew as refiners expanded capacity and there was no immediate indication of increase in domestic output.
The domestic refiners imported 5.8 per cent more crude oil in May year-on-year at 14.586 million tonnes or 3.45 million barrels a day of oil (against 13.784 million tonnes in May 2011). The refining capacity of the country has grown to nearly 215 million tonnes today.
Diesel and LPG pushed petroleum product consumption in May by 5.4 per cent year-on-year. While diesel sales rose by almost 9 per cent in May, petrol consumption was down 4.6 per cent year-on-year. The rise in diesel consumption was driven by the price differential with petrol, extreme summer seasons and power cuts leading to usage of generators.
Crude oil production saw only a miniscule increase of 0.5 per cent annually, according to data released by the Petroleum & Natural Gas Ministry. The country’s natural gas output has fallen for the 18th straight month in May by 10.8 per cent.
The total domestic gas production is about 115 mmscmd, and demand/supply is about 165 mmscmd. The gap is met through imports.
The drop in output from Reliance Industries-operated Krishna Godavari Basin D6 block, which is the major source of natural gas, pulled down the domestic gas output. The D6 block is currently producing about 30 mmscmd of gas.
Inadequate indigenous production meant higher dependence on more expensive imports. The imports depend upon the demand, price, and tie-ups with the suppliers, industry observers say.
Domestic refiners processed 2.9 per cent more crude oil in May annually. This was mainly driven by private sector players – Essar Oil and Reliance Industries – who turned 8.9 per cent more fuel into products. Reliance Industries does not share data for its second refinery in Jamnagar, which is an export-oriented refinery.