India’s oil consumption rises 4.6% in FY24 but domestic production remains steady

India’s crude oil imports were the highest in the year as the country met 87.7 percent of its oil requirements from supply from other countries.

India’s petroleum products consumption increased 4.6 percent in financial year 2023-24 (FY24) to 233.3 million metric tonne (MMT) while domestic production of the country remained steady in the year.

According to a latest report from the oil ministry, growth in petroleum production consumption—an indication of oil demand—in FY24 was led by 6.4 percent growth in motor spirit (MS) or petrol, 4.4 percent in high speed diesel (HSD), 11.8 percent in ATF and 14.3 percent in naptha consumption besides LPG, lubes, bitumen, petcoke and LDO. Product consumption in the previous year was 223 MMT.

On the contrary, domestic crude oil production in FY24 was 29.4 MMT, almost steady from 29.2 MMT in the previous year. In turn, India’s crude oil imports were the highest in the year as the country met 87.7 percent of its oil requirements from supply from other countries. In comparison, India’s dependency on imports of crude oil was 87.4 percent and 85.5 percent in FY23 and FY22, respectively.

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India’s higher import dependency for crude oil becomes a challenge for the country amid soaring oil prices due to geopolitical tensions in the Middle-East and controlled supply from the Organisation of Petroleum Exporting and its allies (OPEC+).

To immune the country from rising oil prices, the Indian government has been pushing country’s oil explorers ONGC and Oil India Limited (OIL) to boost production. India’s largest oil and gas explorer ONGC aims to reverse years of declining production by FY25 and is eyeing new output from its Krishna Godavari (KG) basin to gradually raise output. Production boost from ONGC’s KG basin is expected to increase the company’s overall oil production by 11 percent and that of gas by 15 percent.

On the crude trade front, India has diversified its sources of crude oil as the country is now buying from 37 countries, compared to 29 countries earlier. This decision has been taken to ensure energy availability in India at affordable prices. Russia, which used to account for only 0.2 percent of India’s total crude requirements before 2022, now supplies around 30 percent of total crude imports.

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