India’s crude oil production declined 5.1 percent in February from last year at 2.2 million metric tonne (mmt), according to showed latest oil ministry data. The Indian upstream companies are likely to miss the domestic crude oil production target for the current fiscal 2024-25 as the country’s crude oil production stands at 24.2 mmt till Feb in the current year, significantly lower than the target of 28.5 mmt.
In February, India’s largest upstream company ONGC produced 1.3 mmt of crude, lower than last year’s production of 1.4 mmt in the same month. Meanwhile, state-run Oil India produced 0.3 mmt of crude oil and the private players produced 0.6 mmt of crude oil in February.
India’s oil and gas exploration companies’ production has been declining in recent years primarily on account of the natural decline of its mature fields.
To meet the country’s rising oil demand amid declining domestic production, India’s crude oil imports rose by 4.7 percent during February, increasing the reliance on imports to 89.4 percent in the month. The net oil and gas import bill in February rose to $9.7 billion, much higher than the import bill of $9.4 billion last year. Out of the total imports, crude oil imports constitute $ 10.6 billion, LNG imports were at $1.3 billion and the exports were $ 3.9 billion during February 2025.
The decline in the country’s oil production calls for serious measures by the government such as the implementation of the Oilfields (Regulation and Development) Act, necessary to boost domestic oil and gas production.
"The objective of the changes to the Oilfields Act is to create a more investor-friendly environment and enhance the global competitiveness of future oilfield contracts by addressing long-standing concerns of exploration companies," said Rahul Chauhan, upstream technical research country lead at S&P Global Commodity Insights, in an earlier report.
The Lok Sabha recently cleared the ORD Act, which aims to bring in investment in India’s oil and gas exploration sector to boost domestic production.
Gas economy
Contrary to India’s ambition of becoming a gas-based economy by 2030, India’s natural gas consumption rose by a mere 0.6 percent in February from last year to 5,789 million metric standards cubic metre (mmscm).
In the current financial year till February, India’s natural gas demand rose by 9.1 percent from the previous year to 66,975 mmscm. Gas consumption had spiked in the summer months on account of higher demand from the power plants amid scorching temperatures.
India aims to increase the share of natural gas to 15 percent by 2030 in the country’s energy basket from the current 6 percent. Hardeep Singh Puri, Minister of Petroleum and Natural Gas, had told Moneycontrol that the government is committed to meet the set target but also faces challenges amid limited gas supply. Puri added that India would benefit from the increased supply in the market as global gas infrastructure is expected to mature by 2027.
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