Exploring India’s Oil Supply: Key Sources, Domestic Production, and Government Initiatives

To meet the growing demands of the 1.4 billion population, India imports oil from several countries, including the Middle East, Russia, Iraq, and Saudi Arabia. In this article, we will understand how India meets its demand for natural gas and where India gets its oil supply from.

• India imports the majority of its crude oil from countries like Iraq, Saudi Arabia, and Russia to meet its growing energy needs, as domestic production falls short of demand.
• The government is working on strategies such as increasing foreign investments, promoting alternative fuel sources, and boosting domestic exploration to reduce reliance on oil imports and enhance energy self-sufficiency.

As the country with the largest population in the world, India’s oil requirements are quite high, requiring us to import almost 84% of our total crude oil demand. We are also the 3^rd third largest consumers and importers of oil in the world.

As crude oil prices increase worldwide, so does our import bill, as our domestic oil production is also witnessing a decline. Liquefied natural gas (LNG) is also imported to India in large quantities, making us the 4^th biggest importer of LNG from countries like Qatar, Australia, the United States, and Russia for industries such as power generation, fertilisers, and city gas distribution.

There are two ways in which India tries to fulfil its oil demand:

• Exploration and production of oil domestically
• Imports from oil-producing countries

Over the last few decades, the amount of crude oil that India imports has been on the rise. To understand the extent of our imports, here are some numbers:

• We imported more than
  770,000 barrels per day of crude oil in April of 2024 from Russia, the highest ever per day import in a year.

Since we are dependent on oil imports and our domestic production is not able to meet the growing needs of the country, we have to pay for high oil prices through excessive imports that cost us
$132.40 billion in FY24.

The top 5 countries from which India imports its oil are as follows:

• Iraq: $37.1 billion
• Saudi Arabia: $32.7 billion
• Russia: $25.5 billion
• United Arab Emirates: $14.8 billion
• United States: $10.8 billion

The Organisation of the Petroleum Exporting Countries (OPEC) was established in 1960 by Iraq, Kuwait, Iran, Saudi Arabia, and Venezuela. Since its founding days, OPEC has come a long way and now has 13 countries as its members. They meet regularly to set targets for the production of oil to manage global oil demands and optimise the prices of oil for all the countries involved. Some of its primary functions are:

• Establishing a coordinated and unified price mechanism for all the oil-producing member states.
• Making sure the oil market remains stable.
• Ensuring that oil gets supplied to consumers efficiently, regularly and in an economical manner.
• Ensure that all the stakeholders involved, like the producers of oil and the businesses that invest in this industry, get effective returns on their investments.

List of OPEC countries

The year 2016 saw the formation of the OPEC+ countries, which resulted in the addition of a few more countries to the above list. This was done to increase the control and reach of the group over the crude oil market globally.

The non-OPEC countries include:

With the help of the above countries, major oil-importing countries like India can procure crude oil from diversified sources and meet our oil requirements at optimum prices. Although the OPEC countries remain a major supplier of crude oil for India, our country also imports a significant portion of its oil requirements from the USA.

Similarly, India has also signed multiple deals with Russia to get crude oil at an effective rate to fulfil its demands without seeing a high increase in the prices of oil.

Oil is the most exported commodity in the world. Here is the list of the top 10 oil exporters who account for nearly 75% of the total oil exports:

The government is well aware of the growing oil demand of the country and has taken several steps to reduce our dependency on imports so that we can move towards becoming more self-sufficient:

• The Indian government gave its approval for allowing 100% FDI via the automatic route for PSUs that are a part of the oil and gas industry in 2021.
• The government has announced numerous subsidies to reduce the burden of increasing oil prices on the Indian population.
• The government is trying to promote and use Underground Coal Gasification to meet its internal energy requirements.
• In a bid to look for alternate fuel sources, the government has initiated the National Gas Hydrate Programme (NGHP) to identify gas hydrates.
• India has also launched the Open Acreage Licensing Policy, or OALP, to increase oil exploration efforts in the country.