Crude import bill may rise 20% in FY19 on soaring global prices
India’s crude oil import bill may increase 20% to $105 billion in this financial year from $88 billion in 2017-18, the petroleum and natural gas ministry has estimated, assuming average crude oil price of $65 per barrel for the year, about $9 a barrel less than the current rate
Crude oil prices have been surging in the international market lately, driven by a combination of healthy demand, supply cut by key oil producers led by the Organisation of the Petroleum Exporting Countries (OPEC) and Russia, and fears of American sanctions against Iran. Brent crude price has risen 63% in the past ten months.
High crude oil prices push up rates for petrol and diesel, the mainstay of road transport in the country, inducebroader inflation, boost public demand for fuel tax cuts and subsidies, and pose a serious risk to government finances.
India’s crude oil import bill swelled by a quarter in 2017-18 from $70 billion in the previous year as prices rose sharply, according to the ministry’s petroleum planning and analysis cell. The average price of Indian basket crude was up 19% at $56.43 per barrel in 2017-18, from $47.56 in 2016-17.
Refiners imported 221million metric tonnes of crude oil in 2017-18 against 214 million metric tonnes in 2016-17. As a result, the country’s oil import dependence rose to 82.8% of consumption in 2017-18 from 81.7% a year ago.
India’s crude oil output fell for the sixth straight year in 2017-18 to 35.7 million metric tonnes as production at ageing fields continued to decline. The output was 36 million tonnes in 2016-17.
In 2017-18, natural gas production rose 2.8% to 31.7 billion cubic meters while import of liquefied natural gas (LNG) expanded 7% to 26.5 billion cubic meters. Imported LNG accounted for about 45% of total gas consumption in the country, up 5% in 2017-18.
Consumption of all petroleum products grew 5.3% in 2017-18, compared to 5.4% growth registered in 2016-17. Petrol consumption rose 10% and diesel 6.7% in 2017-18. Consumption of liquefied petroleum gas (LPG), mainly used for cooking, rose 8%. Demand for kerosene (-28.8%), naphtha (-5.2%) and fuel oil shrank.
Indian refiners processed 2.7% more crude in 2017-18 than in 2016-17, mainly due to increase in crude oil processed by state-run refineries. Refiners exported 9.5% more diesel in 2017-18. Overall, the export of petroleum products expanded 2% while import contracted 2% during the year.