The parliamentary committee's concerns about India's oil and gas sector efficiency come amid a global oil supply crisis that has pushed Brent crude to $104.49 per barrel, up 44% from $72.48 on February 27 prior to the Iran war. As per Oilprice.com, the conflict has created a 10.1 million barrels per day (mbd) global supply shortfall, with the Strait of Hormuz accounting for roughly 20% of seaborne oil transport. The crisis has been compounded by significant infrastructure disruptions, with the Iranian strike on Qatar's Ras Laffan complex taking 17% of Qatari capacity offline and repairs expected to take three to five years. This global supply shock highlights the critical importance of domestic production efficiency in countries like India.
A parliamentary committee has raised concerns about the effectiveness of rising capital expenditure in India's oil and gas sector, according to reports from The Hindu BusinessLine. The committee on public undertakings noted that capital expenditure by petroleum and natural gas public sector undertakings (PSUs) rose from ₹1.3 lakh crore in 2020-21 to a projected ₹1.7 lakh crore in 2024-25. This represents a 46% increase in spending over the four-year period, yet domestic production outcomes remain concerning. The global oil supply crisis, which has pushed West Texas Intermediate crude up 12.5% over the week and gasoline prices to $3.04 per gallon, underscores the urgency of translating increased investments into measurable production gains.
Despite the substantial increase in investments, domestic crude oil production is expected to decline to 28.7 million metric tonnes (MMT) in 2024-25 from 34.2 MMT in 2018-19, as reported by The Hindu BusinessLine. This represents a 16% decline in production over the six-year period, raising questions about the efficiency of the increased capital expenditure in translating into measurable production gains. The global supply shortage, which has European gas storage at 46 billion cubic metres, down from 60 bcm a year earlier, demonstrates the critical importance of domestic production capacity in maintaining energy security.
The committee's observations come weeks after the Centre approved the ₹84,000 crore Samudra Manthan national offshore exploration scheme to step up deepwater oil and gas exploration and reduce India's dependence on imported crude, according to The Hindu BusinessLine. The panel emphasized that with India importing nearly 90% of its crude oil requirement, it was crucial that higher investments result in measurable gains in domestic production. The global oil supply crisis, which has Iraq and Kuwait as the hardest hit producers due to lack of significant bypass pipelines, underscores the urgency of India's domestic production strategy.
In an action taken report tabled in Parliament on Thursday, the committee on public undertakings has asked the petroleum ministry to submit a detailed report explaining how recent exploration reforms and newly awarded blocks will help raise production, as reported by The Hindu BusinessLine. The committee noted that while the ministry's reply listed several policy initiatives, it did not adequately explain whether the increased spending was translating into higher output, highlighting the need for clearer accountability measures. With the International Energy Agency calling the Strait crisis the "biggest energy security threat" in history, the committee's recommendations take on renewed urgency as global energy security faces unprecedented challenges.
