The crude oil production decreased 4.2 per cent YoY in September. During the month, the production volumes of Oil and Natural Gas Corporation (ONGC) and Oil India (OIL) declined 7.2 per cent YoY and 0.9 per cent YoY, respectively. Meanwhile, for fields under production-sharing contracts, volumes increased 1.7 per cent YoY. Crude oil import volume increased 2.1 per cent YoY during September. India’s crude oil import dependency was 83.3 per cent in the above month. The Petroleum Planning & Analysis Cell estimates crude imports at 229 million metric tonnes (mmt) for FY19 (FY18: 220mmt).
The refining throughput rose 1.3 per cent YoY to 20.9mmt; the refining throughput was up 5.0 per cent YoY during April-September. During the month, the petroleum product output increased 2.5 per cent YoY to 21.3mmt. The growth was driven primarily by Indian Oil Corporation (AAA/Stable) and Hindustan Petroleum Corporation (HPCL), which recorded an increase of 3.9 per cent YoY and 5.2 per cent YoY, respectively, in their throughput. This was partly offset by lower throughput from Reliance Industries (AAA/Stable) and Bharat Petroleum Corporation (BPCL). On a cumulative basis, the production was up 6.6 per cent YoY during April-September.
Meanwhile, NG production fell 1.4 per cent YoY and its consumption was down 0.9 per cent YoY. During the month, production volumes increased 3.5 per cent YoY for ONGC, while it declined 7.2 per cent YoY and 16.6 per cent YoY for OIL and private/joint venture fields, respectively. NG consumption declined in September on account of a decrease in domestic demand. As a result, LNG imports also fell 0.4 per cent YoY. On a cumulative basis, LNG imports were up 15.3 per cent YoY during April-September.
Brent crude oil price, the global benchmark for crude prices, continued its upward trajectory to hit a four-year high of $86.07 per barrel on 4 October, as the market grappled with the expected loss of oil supply from sanction-hit Iran. Such highs had last been seen in November 2014.
From mid-October, however, an increase in supply led to a gradual decline in Brent crude oil prices. Furthermore, the US waived off such sanctions on 3 November for eight countries, including India and other major importers of oil from Iran. Subsequently, the prices dipped to $72.68 per barrel on 5 November, down 14.6 per cent month-on-month (MoM), on fears of a glut in the market. The declining trend was reversed again when Brent crude oil prices increased on 12 November on an announcement by Saudi Arabia that it would cut its exports by 500,000 barrels per day in December, and speculations that the Organisation of the Petroleum Exporting Countries (Opec) will slash output in 2019.
India Ratings and Research (Ind-Ra) notes that Russia and Saudi Arabia are the largest exporters of oil globally; the US produces only about 11.5 million barrels a day. Hence, if the Opec and its allies decide to hold their supply, oil prices are likely to rebound.
This will increase India’s import bill as it meets over 80 per cent of its demand through imports, and a change of even $1 per barrel will impact the country’s import bill by Rs 61.6 billion.