{"id":14910,"date":"2021-04-22T00:00:00","date_gmt":"2021-04-22T00:00:00","guid":{"rendered":"https:\/\/www.nextias.com\/current_affairs\/uncategorized\/22-04-2021\/indias-falling-oil-and-gas-production\/"},"modified":"2021-04-22T00:00:00","modified_gmt":"2021-04-22T00:00:00","slug":"indias-falling-oil-and-gas-production","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/22-04-2021\/indias-falling-oil-and-gas-production","title":{"rendered":"India\u2019s Falling Oil and Gas Production"},"content":{"rendered":"<p><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong><u>In News<\/u><\/strong><\/span><\/span><\/p>\n<p><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">India\u2019s <strong>crude oil production and natural gas production has fallen<\/strong> by <strong>5.2 per cent<\/strong> and <strong>8.1 per cent<\/strong> respectively in the Financial Year (FY) 21.<\/span><\/span><\/p>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">India is the <strong>third-largest energy and oil consumer in the world <\/strong>after <strong>China <\/strong>and the <strong>US<\/strong>.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">India\u2019s<strong> oil and gas import dependence is 77.1 per cent <\/strong>for April 2020-January 2021.<\/span><\/span><\/li>\n<\/ul>\n<p><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong><u>Reasons for Low Production<\/u><\/strong><\/span><\/span><\/p>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong>Old and Less Productive Wells<\/strong><\/span><\/span>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Most of India\u2019s crude oil and natural gas production comes from<strong> ageing wells that have become less productive <\/strong>over time.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong>Reluctance to Invest in New Technologies<\/strong><\/span><\/span>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Extracting oil from more difficult fields such as ultra deepwater fields needs <strong>technologically intensive means<\/strong> which <strong>require more investment <\/strong>and producers are unwilling to do that.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong>Lack of Private Players<\/strong><\/span><\/span>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Crude oil production in India is <strong>dominated by<\/strong> two major state-owned exploration and production companies namely <strong>Oil and Natural Gas Corporation<\/strong> (ONGC) and <strong>Oil India<\/strong>.<\/span><\/span>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">These companies are the key bidders for hydrocarbon blocks in auctions and were the <strong>only successful bidders in <\/strong>the fifth and latest round of auctions under the<strong> Open Acreage Licensing Policy (OALP) regime<\/strong>.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">An important reason for this are <strong>delays in the operationalisation of hydrocarbon blocks<\/strong> due to delays in major environmental clearances and approval by the regulator of field development plans.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">The <strong>cess on domestically produced crude oil<\/strong> is currently <strong>20 per cent <\/strong>which has not been reduced to 10 per cent as desired by the industry players.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong>Low Interest by Foreign Players<\/strong><\/span><\/span>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Interest from foreign players in oil and gas exploration in India has been low because they are <strong>skeptical about the current system of auction and regulations<\/strong> of the sector and consider it <strong>vague<\/strong>.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong>Environmental Reasons<\/strong><\/span><\/span>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">A government official noted that <strong>internal maximum production levels<\/strong> set by oil and gas majors <strong>to address climate change<\/strong> had also <strong>lowered interest<\/strong> by oil majors to expand operations in India.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong>Covid-19 Related Delays<\/strong><\/span><\/span>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Covid-19 induced lockdowns led to<strong> operations at reduced capacities<\/strong>.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong>Fall in demand<\/strong> led to refiners trimming their capacity utilisation in order to remain afloat and protect their margins.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong><u>Data Highlight and Impac<\/u><\/strong><\/span><\/span><\/p>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">India\u2019s crude oil and natural gas production have been <strong>falling consistently since\u00a0 2011-12<\/strong>.<\/span><\/span>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Producers extracted <strong>30,491.7 <\/strong>Thousand Metric Tonnes (TMT) of<strong> crude oil<\/strong> and <strong>28670.6 <\/strong>Million Metric Standard Cubic Metres (MMSCM) of natural gas was extracted in the <strong>FY21.<\/strong><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Low domestic production of crude oil and natural gas <strong>makes India more reliant on imports<\/strong>.<\/span><\/span>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">The share of imports as a proportion of overall crude oil consumption in India has risen from<strong> 81.8 per cent in FY12<\/strong> to <strong>87.6 per cent in FY20<\/strong>.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong><u>Suggestions<\/u><\/strong><\/span><\/span><\/p>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">ONGC should <strong>boost its investments<\/strong> in explorations and increase tie-ups with foreign players.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Producers should be <strong>provided enough technological support <\/strong>in extracting oil and gas from difficult oil and gas fields.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">The government should make the current<strong> system of auction and regulation more open and transparent<\/strong> than before and also convey this to foreign players.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Also, it should <strong>provide fiscal incentives<\/strong> to attract foreign players to India\u2019s upstream sector.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">The <strong>cess on domestically produced crude oil <\/strong>should be<strong> reduced<\/strong> so that the sector sees more private sector involvement.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong>Efforts should be fastened<\/strong> in boosting oil and gas production under the government&#8217;s <strong>Aatmanirbhar Bharat initiative<\/strong>, which aims to <strong>boost the use of natural gas in India\u2019s primary energy mix <\/strong>from the current 6.2 per cent to 15 per cent by <strong>2030<\/strong>.<\/span><\/span>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">The Indian energy consumption basket is primarily <strong>dominated by Coal and Crude Oil<\/strong>.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<table cellspacing=\"0\" class=\"Table\" style=\"border-collapse:collapse; border:none; width:624px\">\n<tbody>\n<tr>\n<td style=\"background-color:#fff2cc; border-bottom:1px solid black; border-left:1px solid black; border-right:1px solid black; border-top:1px solid black; vertical-align:top; width:624px\">\n<p><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong><u>Oil and Natural Gas Corporation <\/u><\/strong><\/span><\/span><\/p>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">It was set up in <strong>1995 <\/strong>and works under the<strong> Ministry of Petroleum and Natural Gas<\/strong>.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">It is a <strong>Maharatna Public Sector Undertaking<\/strong> (PSU) of the Government of India.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">It is the <strong>largest crude oil and natural gas company in India<\/strong>, contributing around 70% to Indian domestic production.<\/span><\/span><\/li>\n<\/ul>\n<p><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong><u>Oil India<\/u><\/strong><\/span><\/span><\/p>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">It was <strong>incorporated in 1959<\/strong> and became a <strong>wholly-owned<\/strong> government enterprise in <strong>1981<\/strong>.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">It is also owned by the <strong>Ministry of Petroleum and Natural Gas<\/strong>.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">It is the <strong>second largest<\/strong> Indian government hydrocarbon exploration and production corporation.<\/span><\/span><\/li>\n<\/ul>\n<p><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong><u>Open Acreage Licensing Policy<\/u><\/strong><\/span><\/span><\/p>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">It was<strong> launched in June 2017<\/strong> as one of the key drivers to accelerate the <strong>Exploration and Production<\/strong> (E&#038;P) activities in India.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Under this, exploration companies <strong>can apply for any block for E&#038;P<\/strong>, even for those which are not listed by the government.<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">It has helped in <strong>removing red-tapism <\/strong>and brought in a <strong>quantum jump in the E&#038;P sector<\/strong> leading to<strong> better utilization of natural resources of India<\/strong> and foster <strong>Ease of Doing Business<\/strong>.<\/span><\/span><\/li>\n<\/ul>\n<p><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><strong><u>Other Related Policies and Schemes<\/u><\/strong><\/span><\/span><\/p>\n<ul>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Draft Indian Petroleum and Explosives Safety Service Rules, 2020<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\"><a href=\"https:\/\/www.nextias.com\/current-affairs\/08-04-2021\/520\"><span style=\"color:#1155cc\">National Policy on Biofuels<\/span><\/a><\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Policy Framework to Promote and Incentivise Enhanced Recovery Methods for Oil and Gas<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Policy Framework for Exploration and Exploitation of Unconventional Hydrocarbons<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Policy Reforms in Exploration of Oil and Gas<\/span><\/span><\/li>\n<li><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Discovered Small Fields Policy<\/span><\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-size:11pt\"><span style=\"font-family:Arial,sans-serif\">Source: <a href=\"https:\/\/indianexpress.com\/article\/explained\/why-indias-oil-and-gas-production-is-falling-7282906\/\" target=\"_blank\" rel=\"noopener\"><span style=\"color:#1155cc\">IE<\/span><\/a><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In News India\u2019s crude oil production and natural gas production has fallen by 5.2 per cent and 8.1 per cent respectively in the Financial Year (FY) 21. India is the third-largest energy and oil consumer in the world after China and the US. India\u2019s oil and gas import dependence is 77.1 per cent for April [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":14911,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[156,92,31,30,26,25,46],"class_list":["post-14910","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","tag-distribution-of-natural-resources","tag-energy","tag-government-policies-interventions","tag-gs-2","tag-gs-3","tag-gs1","tag-indian-economy-related-issues"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2023\/07\/6872360current-affairs.jpg","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/14910","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=14910"}],"version-history":[{"count":0,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/14910\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/14911"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=14910"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=14910"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=14910"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}