Modi government urged to boost domestic oil and gas production
What's the story
The ongoing conflict in West Asia has raised alarms over India's heavy reliance on energy imports. The situation has highlighted the economic risks of global supply disruptions. As a result, industry players are pushing for a major increase in domestic oil and gas production. This comes as India looks for alternative fuel supplies and routes due to the threat posed by the near-closure of the Strait of Hormuz, to its oil and LPG imports.
Import vulnerability
Impact of conflict on India's energy imports
The ongoing conflict has put 40-50% of India's oil imports and up to 85% of LPG imports at risk. The country relies on imports for about 90% of its oil needs and half of its gas requirements. Despite diversifying sourcing from 27 countries in 2018 to 41 now, domestic production remains stagnant even after various policy reforms aimed at attracting investments in the upstream sector.
Production decline
Crude production data and import bill
Latest data from the oil ministry's Petroleum Planning and Analysis Cell shows India's crude production during April-January this fiscal year was 23.5 million metric tons, a 2% drop from the same period last year. In FY25, crude production stood at 28.7 million tons, down from 29.4 million tons in FY24. Oil and gas together accounted for $131.3 billion of the annual import bill in FY25 against $122 billion in FY24.
Reserve assurance
Strategic reserves and stockpiles
India has enough crude oil reserves for 25 days, including stocks in refiner's storage tanks, pipelines, and in transit. The country's strategic petroleum reserves (SPR) provide about a week's cover based on daily consumption of 5.6 million barrels (bpd). It also has a 25-day stock of refined oil products such as petrol and diesel which will continue to shift as refiners process crude and export these products.
LPG security
Alternative LPG supplies secured
India has started securing LPG supplies from the portfolios of global firms such as UAE's Abu Dhabi National Oil Company (Adnoc) and Algeria's state-run oil and gas company Sonatrach. However, industry leaders say this crisis further emphasizes the need to accelerate domestic exploration and production. Vedanta Chairman Anil Agarwal stressed that any conflict in a resource-rich region makes India vulnerable due to its high import dependence on natural resources.
Policy change
Need for national priority declaration
Agarwal called for a national priority declaration of this sector, simplification of approvals, and rapid increase in domestic production. He emphasized the need to accelerate exploration across India's vast but underdeveloped hydrocarbon landscape. India has 26 sedimentary basins covering around 3.36 million square kilometers, yet only a portion of this area has been intensively explored. Large parts of India's onshore and offshore basins are underexplored compared with mature hydrocarbon provinces globally, Agarwal said.