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Dependence on oil imports may go up

NEW DELHI: Even as India’s refining capacities are poised to grow by 58 per cent in the next four years, its crude oil import requirement would increase to 85 per cent from 70 per cent now as the country is redeveloping its economy without paying adequate attention to harness alternative sources of energy.

Making these projections, an analysis carried out by industry body Associated Chambers of Commerce and Industry of India (Assocham) says that oil companies, both in the public and private sectors, have planned extension in their refining capacity to an ambitious level of 235 million tonnes by 2012 which would require higher volumes of imported crude and thus its import requirement is going to grow by another 15 per cent.

Releasing the analysis, Assocham President Sajjan Jindal noted that proven oil discoveries were not happening in India to keep pace with its redevelopment process and neither decisive policy pronouncements were forthcoming to harness sources of non-conventional energy; the shortage would remain a major issue even at the terminal year of the XI Plan.

Emphasising the need to harness alternative sources to fossil fuel-based energy to acquire energy independence, he said, “It is true that refining capacities will also register a manifold increase but for that we need crude oil which is a scarce commodity now and will continue to be so in future too.”

The chamber feels that the higher crude oil imports will not impact the trade deficit adversely as most of the new capacity additions are aimed at exporting value-added products. Hence, the import bill would be to a great extent offset by exports of petroleum products.

Exports of petroleum products have been rising significantly since financial year 2005. During that year, India’s exports of petroleum products recorded a growth of 96 per cent. In 2006, POL exports were worth $11.5 billion, a growth of 65 per cent. Between financial year 2000 and 2004, exports had risen on an average by 23 per cent annually.

The analysis further notes that high economic growth prospects especially in China and India will ensure significantly higher international oil prices.Despite such high dependency on oil imports, its impact on domestic prices and economic growth has remained muted so far. This is because of the subsidies factor, says the chamber.

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