India is the third largest importer of crude oil in the world. In 2016, the Indian government replaced its existing policy for state-run oil companies to import crude oil. Previously, oil companies had to get government approvals for long-term contracts, but the new policy allows them to purchase crude oil directly from the spot market without a tendering process. This provides price advantages for both the government and consumers. India imports crude oil from many countries including Iraq, Saudi Arabia, Iran, Venezuela, and the United States. The majority of India's oil needs are met through imports as domestic production satisfies less than 25% of demand.

1. Crude Oil Imports in India
By : Prachi Sharma
2016pbm5332

2. Crude Oil Industry
• The most present and essential resources in everyday life.
• More than 4 billion metric tons of oil is produced annually.
• Among the top 10 companies worldwide based on revenue, six are in
the oil industry.
• Nearly, one third of the oil amount is generated in the middle east
region.
• Top 3 producers of crude oil are
1. Saudi Arabia
2. United States of America
3. Russia

3. Top 10 oil consuming countries
• The United States
• China
• Japan
• India
• Russia
• Saudi Arabia
• Brazil
• Germany
• South Korea
• Canada

4. Benchmark (Crude Oil)
A benchmark crude or marker crude is a crude oil that serves as a reference
price for buyers and sellers. There are primary benchmark :
1. West Texas Intermediate
2. Brent Blend
3. OPEC Basket
Benchmarks are used because there are many different varieties and
grades of crude oil. Using benchmarks makes referencing types of oil easier
for sellers and buyers. There is always a spread between WTI, Brent and
other blends due to the relative volatility, sweetness/sourness (low
sulphur is more valuable) and transportation cost. This is the price that
controls world oil market price.

6. OPEC
• Organization of the Petroleum Exporting Countries is an intergovernmental
organization of 14 nations as of February 2018, founded in 1960 in Baghdad by the first
five members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela), and headquartered since
1965 in Vienna, Austria. As of 2016, the 14 countries accounted for an estimated 44
percent of global oil production and 73 percent of the world's "proven" oil reserves,
giving OPEC a major influence on global oil prices that were previously determined by
American-dominated multinational oil companies.
• OPEC's stated mission is "to coordinate and unify the petroleum policies of its member
countries and ensure the stabilization of oil markets, in order to secure an efficient,
economic and regular supply of petroleum to consumers, a steady income to producers,
and a fair return on capital for those investing in the petroleum industry.

7. Indian Crude oil Industry
India is third largest importers of oil and petrol in the world. Like many other Indian industries, the
development of the Indian crude industry began very slowly. It started mainly in the north-eastern
part of Indian especially in the place called Digboi in the state of Assam. Until the 1970's the
production of crude oil and the exploration of new location for extraction of crude oil were mainly
restricted to the north-eastern state in India. However an important advancement in the Indian crude
oil industry came with the passing of Industrial Policy Resolution in 1956, which emphasized focus
on the growth and promotion of industries in India. The crude oil industry has contributed heavily to
the manufacturing industry in the country through foreign trade in petroleum products.
Rapid globalization, fast-changing technology, and the changing methods in the way business is
conducted have brought significant changes and enormous opportunities for petroleum companies in
India to flourish and expand their operation to global markets.

8. Continued…
• The Indian economy demonstrated a robust growth of 7.5% in 2014-15, 8% in 2015-16 and a
slight moderation to 7.1% in 2016-17. Real GDP, viz., GDP at constant (2011-12) prices for the
year 2016-17 is estimated at Rs 121.90 lakh crore showing a growth rate of 7.1 percent over
the year 2015-16 of Rs 113.81 lakh crore. The growth is against a backdrop of weak to
moderate growth in respect of emerging and advanced economies respectively. The economy
displayed resilience in the aftermath of demonetization along with a macro-economic
environment of declining prices of a number of commodities including crude oil, sharp
contraction in trade deficit and revival in exports. There has been a moderation in growth and
demand for petroleum products tapered significantly from double digits in 2015-16 to a
growth of 4.9% during 2016-17. Given the limited domestic availability of crude oil and natural
gas, the country is compelled to import over 75% of its domestic requirement.

9. Consumption of crude oil in India
• Total consumption of petroleum products in the country during 2016-17 was 193.7 million
metric tonnes (MMT) which marked a growth of 4.9% over the consumption of 184.7 MMT
during 2015-16.
• Diesel (LDO+HSD) accounted forth highest consumption share (39%) followed by Petrol/
Motor Spirit (12%), Petroleum Coke (12%), LPG (11%), Naphtha (7%) and Kerosene (3%).
• The share of public and private sector consumption in 2016-17 stood at 78% and 22%
respectively as against 80% and 20% respectively in previous year.
• Highest consumption of LPG in 2016-17 was in domestic distribution sector (88%), naphtha in
petrochemical sector (78%), kerosene mainly in domestic PDS (96%) and diesel in
reseller/retail sector (86%).
• Highest market share in 2016-17 was captured by IOCL (40%) followed by BPCL (19%) and
HPCL (18%). Market share of private companies stood at 22%.

10. Production of crude oil & natural gas in
India
• Report by Ministry of Petroleum & Natural Gas ( economic & statistics division)

11. Trade of Crude oil in India
• India’s import bill on import of Crude Oil, LNG, and Petroleum Products increased by
10.40% in value terms from 2015-16 to 2016-17. Increase in import quantity of crude
oil, LNG and petroleum products has been around 7.86% from 2015-16 to during 2016-
17.
• Growth 5.46% in import of crude oil in terms of quantity and 12.88% in terms of value.
• India’s trade deficit is lower by 6.31% during 2016-2017.
• India’s trade deficit with OPEC Countries has increased by 34%.
• Percentage of India’s OPEC imports to India’s total imports has reduced from 23.6% in
2015-16 to 27.6% in 2016-17.
• Import dependency in India during 2016-17 is 81.68%.
• Foreign Direct Investment inflow was received in oil & gas sector was ₹ 1197.06 crore
contributing almost 0.41% of total FDI inflow in the economy during 2016-17

12. Import of crude oil
• Import of crude oil was increased by 5.46% in quantity terms and
12.88% in value terms.
• The average international crude oil price (Indian Basket) was US$
47.58/bbl. during April-March, 2016-17 as compared to US$ 46.17/bbl
in the same period of 2015-16, i.e. registered an increase of 3.05%
after a long declining era.

15. Indian Import Policy (earlier)
• On behalf of Indian government, oil PSUs import crude oil and refine it in their
refineries.
• Earlier, Indian oil companies import through different countries on the future
price defined contracts.
• But due to reduction in oil prices in spot market these companies incurred
huge losses.
• state-run oil marketing have to float a tender to buy crude oil, then get
approvals from the ministry to place an order. The whole process takes up to
two months.

16. New Import Policy
• In April 2016, the government replaced the existing policy on
crude oil import by oil PSUs and empowered them to evolve
their own policies.
• Buying crude oil from spot market gives a definite price
advantage. While it brings down the government’s import bill, in
the long run the beneficiary of lower prices is always the
consumer as the companies pass on the crude price fluctuations
at the retail end.
• Less processing time

17. • The board of PSU refiners such as IOC, HPCL, BPCL, and MRPL would
have the power to decide on crude oil spot purchases without waiting
for the long drawn tendering mechanism.
• the refiners could put in place an ‘integrated trading desk’ model and
do-away with the tendering mechanism of procurement.

18. India Import’s Crude Oil from
• Iraq
• Saudi Arabia
• Iran
• Venezuela
• USA (October, 2017)
• Kuwait
• Nigeria
• UAE
• Malaysia
• Angola
• Brazil
• Mexico
• Egypt

19. Reference
• https://www.livemint.com/Industry/jpAACrEspy5Oywjo9Tg8QP/Oil-imports-India-readies-to-play-hardball-with-
suppliers-o.html
• http://petroleum.nic.in/about-us/psu-subsidiaries-and-others
• https://economictimes.indiatimes.com/news/economy/foreign-trade/iraq-replaces-saudi-arabia-as-indias-lead-oil-
supplier/articleshow/62120071.cms
• http://petroleum.nic.in/sites/default/files/pngstat_1617r_0.pdf
• https://economictimes.indiatimes.com/industry/energy/oil-gas/oil-ministry-working-on-policy-for-spot-trading-of-
crude-oil-psus/articleshow/50997387.cms
• https://www.thehindubusinessline.com/economy/policy/shift-in-govts-crude-oil-import-policy-may-help-indianoil-
save-30-centsbarrel/article9594862.ece
• http://www.business-standard.com/article/economy-policy/govt-eases-oil-psus-crude-oil-import-norms-
116040600719_1.html
• http://www.financialexpress.com/economy/cabinet-likely-to-redo-psu-refiners-crude-buying-model-today/233096/
• https://oilmanmagazine.com/article/india-diversify-crude-oil-import-policy/
• https://edition.cnn.com/2013/07/30/world/oil-and-gasoline-fast-facts/index.html

20. Thank you!!