India's Falling Oil and Gas Production

India experienced a decline in both crude oil and natural gas production during the 2024-25 fiscal year. Crude oil output fell by 2.5% year-on-year to 26.5 million metric tonnes (MMT), marking a decade-long trend of decreasing production. Natural gas production also saw a 1% decrease to 36.1 billion cubic meters, reversing a three-year growth period fueled by Reliance Industries' KG Basin fields.

Reasons for the Decline

The decrease is attributed to the natural decline of mature oil fields, many of which were discovered decades ago. While technological interventions have been used to slow this decline, substantial new discoveries are needed to boost overall production. A lack of significant new discoveries in oil and gas in recent years has compounded the problem.

Impact of Falling Production

The reduced domestic production has increased India's reliance on energy imports, significantly impacting its import bill. In 2024-25, India imported 88% of its crude oil and 51% of its gas, resulting in a $137 billion expenditure on crude imports (up from $133 billion the previous year) and $15 billion on gas imports (up from $13 billion).

Government Initiatives and Economic Implications

The Indian government hopes that new oilfield regulatory laws will attract foreign investment in exploration, potentially leading to new discoveries. India's consumption of petroleum products also slowed in 2024-25, with growth narrowing to 2% compared to 5% the previous year, primarily due to weaker sales of diesel, naphtha, and bitumen.