The path to becoming self-reliant in the oil market is a bit complicated. New investments will have to be made either by putting money from one’s own pocket or attracting foreign investment. The sooner the government gets involved in these preparations, the better.
Crude Oil Production Pti
In the year 2020-21, a total of 29.91 million tonnes of crude oil was produced in the country. This is 0.14 million tonnes less than last year. Companies can argue that the circumstances of COVID were unusual. The Care Ratings report also states that the pace of oil well closure and field development activity on the ground for oil exploration slowed down, hence oil production decreased. But the oil production incident is not just last year’s issue. This slippage has been going on for the last seven years. Even in the current financial year, companies are lagging behind their fixed production targets.
Experts closely monitoring the oil market tell the real reason for this slippage. They say that neither the work of finding new sources of oil is going on fast nor is production starting by investing on the sources which have been discovered. At present, most of the production of oil is being done with the help of those sources which have become old and their oil production capacity has also decreased over time. Domestic companies are also working on how to produce more from existing sources instead of working on new sources.
Oil companies have to find new sources
To increase production, the country’s big government companies will now have to find new sources in the deep sea. Also, investments will have to be made on the sources that have been explored. Sufficient resources are also available with the company for this investment. ONCG had a reserve of more than Rs 1,91,000 crore in the year 2021. Oil India is also sitting on a reserve of more than 22,000 crores. The rising prices of crude in the international market are giving huge profits to these companies. Whatever the cost of crude oil production in the country, the companies are paid on the lines of the international market. With the help of this, a huge dividend falls in the government’s bag. In the year 2021, ONGC gave a dividend of Rs 26,077 crore to the government.
It is necessary to attract foreign investment
Despite the government’s financial incentives, private and foreign companies have their own reasons for not showing interest in oil exploration and production. The main reason is the time taken before starting the block even after it has been allotted. In very good condition this process is completed in an average of 5 to 7 years. Approvals take a long time. Before starting production, the approval of the Directorate General of Hydrocarbons has to be obtained by submitting the environment clearance and survey and field development plan.
Overall, the way to become self-sufficient in the oil market is a bit complicated. New investments will have to be made either by putting money from one’s own pocket or attracting foreign investment. The sooner the government gets involved in these preparations, the better.
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