Discounts on Russian oil narrows.
India’s crude oil imports in the first two months of the current fiscal increased by almost 6% to 43.1 million tonnes from 40.6 million tonnes in the corresponding period of last year as the demand for petroleum products continue to grow amid stagnant domestic production, as per latest data by the Petroleum Planning and Analysis Cell.
In May, the country imported 21.8 million tonnes of crude oil, up 5.7% from May 2022. The country’s crude import bill also registered an increase of 21.4% to $26.1 billion in Apr-May period compared to the year-ago period.
Apart from growing volumes, the increase in import bill can be attributed to the narrowing discounts by Russia which has become the top supplier of crude oil to Indian refiners post the outbreak of conflict between Russia and Ukraine.
According to the industry, Russian discounts on its consignments have reduced to $3-4 per barrel against $8-10 per barrel it offered earlier.
India’s net crude oil import bill could reach $101-104 billion in the current financial year 2024-25 from $96.1 billion in FY24 provided the discounts on Russian crude purchase remain at prevailing lower levels amid rising import dependency, according to ICRA.
Despite the government’s efforts to boost production and reduce dependency on imports, the production has remained stagnant over the last 10 years. The country’s upstream companies cumulatively produced 4.9 million tonnes of crude oil in April and May, unchanged from last year even as the consumption of petroleum products rose by 2.4% to 40.3 million tonnes.
In his second term as oil minister, Hardeep Singh Puri has said that the focus of the government will be to boost domestic production of oil and gas. He said that Oil and Natural Gas Corp is expected to reach the peak production of 45,000 barrels per day of crude oil from its KG 98/2 block soon, which will aid in domestic output.
The ministry will also conduct the ninth and tenth bidding round under Open Acreage Licensing Programme in the coming few weeks, Puri had said.
The growth in consumption of petroleum products was led by 7.7% growth in demand for motor spirit, 1.6% in high speed diesel, and 12% in aviation turbine fuel. The consumption of liquified petroleum gas grew by 5.5% during the period, as per the report.
Indian oil refineries processed 5.36 million tonnes of crude in the first two months of FY25 against 5.31 million tonnes in Apr-May 2023.
Of the total crude oil processed, Bharat Petroleum Corporation Ltd processed 6.9 million tonnes against 6.7 million tonnes last year. Hindustan Petroleum Corporation Ltd processed 5.8 million tonnes against 5.7 million tonnes the previous year.
Indian Oil Corporation Ltd, however, processed 12.2 million tonnes of crude in Apr-May period against 12.5 million tonnes in the same period a year ago.
The Indian basket crude price averaged $83.56 per barrel during May 2024 as against $89.46 per barrel during April 2024 and $74.98 per barrel during May 2023.
Analysts expect crude oil prices to edge lower in the medium term, and settle at as low as $60/barrel early into 2025. The trending down of prices in the medium term is expected on the likely surplus in the global market by 2025 despite the Organisation of Petroleum Exporting Countries’ decision to continue the voluntary cuts of 2.2 million barrels per day (bpd) till September 2024.
Source:financialexpress.com