• Union Petroleum Minister Hardeep Singh Puri said India has diversified its crude oil imports. The country now imports crude oil from 40 countries, with Argentina joining as the latest supplier.

• The United States, Russia, Saudi Arabia, UAE and Iraq are major suppliers.

• India imports 88 per cent of its total requirements of oil. 

• The price of crude oil in international markets is based on the demand supply scenario, geopolitical issues and various other market conditions. It is difficult to make accurate predictions about crude oil prices, especially amid ongoing volatility.

• Public sector oil companies finalise their crude oil requirements annually based on techno-economic analysis of the petroleum products’ demand and evaluation of various crude oil supply sources through annual term contracts as well as short term spot contracts.

Reasons for rise in crude oil import

• India’s energy consumption is increasing continuously due to sustained economic growth over the last few years resulting in industrialisation, urbanisation, transportation needs, infrastructure development, rising income, improved standard of living, increased access to modern energy coupled with increase in private consumption and gross fixed capital formation, etc resulting in increasing import of crude oil. 

• To ensure uninterrupted supply of petroleum products in the country, Oil Public Sector Undertakings (OPSUs) import crude oil to bridge the supply demand gap in the domestic market.

• The rise in import dependency is primarily due to increase in quantity on account of demand growth, price increase in the international market and exchange rate variations. 

Strategy to reduce import dependency on crude oil

The government has adopted a multi-pronged strategy to reduce the import dependency on crude oil which. 

These include: 

i) Demand substitution by promoting usage of natural gas as fuel/feedstock across the country towards increasing the share of natural gas in the economy and moving towards a gas based economy.

ii) Promotion of renewable and alternative fuels like ethanol, second generation ethanol, compressed biogas and biodiesel.

iii) Refinery process improvements.

iv) Promoting energy efficiency and conservation.

v) Efforts for increasing production of oil and natural gas through various policies, initiatives, etc. 

• The government has been promoting blending of ethanol in petrol under the Ethanol Blended Petrol (EBP) Programme. Blending of petrol has reached approximately 14.6 per cent during Ethanol Supply Year (ESY) 2023-24 and resulted in approximately forex savings of Rs 1.09 lakh crore from ESY 2013-14 to ESY 2023-24. 

• The ethanol produced from sugar-based feedstock has helped sugar factories to reduce their surplus sugar inventory and generate revenue early to clear the dues of cane farmers. 

• During the last 10  years, EBP has helped in expeditious payment of approximately Rs 92,409 crore to the farmers as on September 30, 2024. It is anticipated that 20 per cent ethanol blending in petrol is likely to result in payment of more than Rs 35,000 crore annually to the farmers.

• To promote the use of Compressed BioGas (CBG) as automotive fuel, Sustainable Alternative Towards Affordable Transportation (SATAT) initiative has been launched.

(The author is a trainer for Civil Services aspirants.)