Lok Sabha Question No. 2903 (UNSTARRED), answered on 2024-12-12
Subject: India's Import plans for Brent Crude Oil
Ministry: PETROLEUM AND NATURAL GAS
Asked by: Thiru D M Kathir Anand

## LOK SABHA UNSTARRED QUESTION NO. 2903 TO BE ANSWERED ON 12 DECEMBER, 2024

## India's Import plans for Brent Crude Oil

2903 THIRU D M KATHIR ANAND:

## पेट Ō ोिलयम और Ůाक ृ ितक गैस मंũी

Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

- (a)  whether  it  is  a  fact  that  the  Energy  Information  Administration's  (EIA)  and  Commodities Research  forecasts  Brent  could  average  $80/bbl  in  the  fourth  quarter  of  2024  and  $75/bbl  in 2025, declining to the low $60s by end-2025;
- (b) if so, the details thereof along with India's import plans for Brent crude oil and West Texas Intermediate (WTI) sources in the upcoming year;
- (c)  whether  the  Government has taken/proposed to take any sincere efforts  to bring down the prices of Petrol/ Diesel/ LPG/CNG/ LNG in the country and if so, the details thereof; and
- (d)  whether  any  innovative  measures  being  adopted  by  the  Government  to  reduce  the  heavy burden arising out of its huge oil imports obligations and if so, the details thereof?

## ANSWER

## पेट Ō ोिलयम और Ůाक ृ ितक गैस मंũालय मŐ राǛ मंũी ( ŵी सुरे श गोपी )

## MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS (SHRI SURESH GOPI)

(a) & (b): 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, specially amid ongoing volatility. India is majorly dependent on  crude  oil  imports  to  meet  its  domestic  requirements.  Public  Sector  Oil  Companies  finalize 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. During this procurement of crude oil through Term and Spot contracts by the OMCs and standalone refineries, various compatible grades of crude oil  available  in  the  international  market  (including  crude  oils  benchmarked  to  Brent/WTI)  are contracted out.

## (c): Petrol & Diesel:

Retail prices of petrol and diesel in the domestic market are market-determined and Public Sector Oil Marketing Companies (OMCs) take appropriate decision on pricing of petrol and diesel.

Domestically,  Petrol  and  Diesel  prices  have  come  down  to  Rs.  94.77  and  Rs.  87.67  per  litre respectively  (Delhi  prices) as  a result  of  various  steps  taken  by  Government  and  PSU  OMCs, including reduction of Central Excise duty by the Central Government by a total of Rs. 13/litre and Rs. 16/litre on petrol and diesel respectively in two tranches in November 2021 and May 2022, which was fully passed on to consumers. Some State Governments also reduced state VAT rates to provide relief to citizens. In March, 2024, OMCs also reduced the retail prices of petrol and diesel by Rs. 2 per litre each, across the country.

Government  of  India  also  took  several  other  steps  to  insulate  common  citizens  from  high international prices, which  included diversifying the crude import basket, invoking the provisions of Universal Service Obligation to ensure availability of petrol & diesel in domestic market, increasing the blending of ethanol in petrol, etc.

Recently  PSU  OMCs  have  carried  out  intra-state  freight  rationalisation.  This  has  benefitted consumers located at remote areas, far from Petroleum Oil & Lubricants (POL) Depots in form of  reduced  Petrol  and  Diesel  prices  in  remote  parts  within  the  states.  This  initiative  has  also reduced  the  difference  between  the  maximum  and  minimum  retail  prices  of  Petrol  or  Diesel within a state.

## LPG:

India imports about 60% of the domestic LPG consumed. Price of LPG in the country is linked to its price in the international market. Government continues to modulate the effective price to consumer  for  domestic  LPG.  While  the  average  Saudi  CP  (international  benchmark  for  LPG pricing) rose by 64% (from US$ 385/MT in July 2023 to US$ 632 /MT in November 2024), the effective price for Pradhan Mantri Ujjawala Yojana (PMUY) consumers for domestic LPG was reduced by 44% (from Rs. 903 in August 2023 to Rs. 503 in November 2024).

The retail selling price of a 14.2 Kg domestic LPG cylinder is currently Rs 803 in Delhi. After a targeted subsidy of Rs 300/cylinder to PMUY consumers, Government of India is providing 14.2 Kg LPG cylinders at an effective price of Rs.503 per  cylinder (in  Delhi). This is available to more than 10.33 crore Ujjwala beneficiaries, across the country. Apart from the direct subsidy to consumers,  the  OMCs  have  also  been  compensated  Rs  22,000  crore  in  FY  2022-23  by Government of India to cover the under-recoveries suffered by them in not passing on the high international LPG prices to the domestic LPG consumers.

## Natural Gas:

The prices of Compressed Natural Gas (CNG) in any location is fixed by the authorised City Gas Distribution  (CGD)  entity  after  considering  cost  of  gas  procured,  State  taxes,  tariff  and  other components.

LNG (Liquefied Natural Gas) is imported by various natural gas consumers, marketeers etc. on long  term  contracts  and  in  spot  markets.  The  prices  of  LNG  are  commercially  agreed  upon between buyer and seller in the international market. However, to reduce the impact of increase in  international  gas  prices  on  CNG  prices  in  India,  Government  has  taken  various  steps, including, increasing domestic APM gas allocation to CNG (Transport) and PNG (Domestic) by about  250%  of  the  allocation  in  2013-14,  diverting  domestic  gas  from  power  and  other  nonpriority  sectors  to  meet  the  requirements  for  CNG  (transport)  and  PNG  (domestic)  segments, declaring CNG(T)/PNG(D) segment as the first priority for allocation of domestic natural gas.

(d): Government has adopted a multi-pronged strategy to reduce the dependency on crude oil which, inter alia, include demand  substitution by promoting usage of natural gas as fuel/feedstock across the country towards increasing the share of natural  gas in economy  and moving towards gas based economy, promotion of renewable and alternate fuels like ethanol, second  generation  ethanol,  compressed  bio  gas  and  biodiesel,  refinery  process  improvements, promoting  energy  efficiency  and  conservation,  efforts  for  increasing  production  of  oil  and natural gas through various policies initiatives, etc. For promoting the use of Compressed Bio Gas  (CBG)  as  automotive  fuel,  Sustainable  Alternative  Towards  Affordable  Transportation (SATAT) initiative has also been launched.

The government has been taking various steps to boost domestic oil and gas production which, inter-alia, include:

- i. Policy under PSC regime for early monetization of hydrocarbon discoveries, 2014.
- ii. Discovered Small Field Policy, 2015.
- iii. Hydrocarbon Exploration and Licensing Policy (HELP), 2016.
- iv. Policy for Extension of PSCs, 2016 and 2017.
- v. Policy for early monetization of Coal Bed Methane, 2017.
- vi. Setting up of National Data Repository, 2017.
- vii. Appraisal of Un-appraised areas in Sedimentary Basins under National Seismic Programme, 2017.
- viii. Policy framework for extension of PSCs for Discovered Fields and Exploration Blocks under Pre-New Exploration Licensing Policy (Pre-NELP), 2016 and 2017.
- ix. Policy to Promote and Incentivize Enhanced Recovery Methods for Oil and Gas, 2018.
- x. Policy  Framework  for  exploration  and  exploitation  of  Unconventional  Hydrocarbons under  Existing Production  Sharing  Contracts  (PSCs),  Coal  Bed  Methane  (CBM) Contracts and Nomination Fields, 2018.
- xi. Natural Gas Marketing Reforms, 2020.
- xii. Lower  Royalty  Rates, Zero Revenue  Share  (till Windfall Gain)  and no drilling commitment  in  Phase-I  in  OALP  Blocks  under  Category  II  and  III  basins  to  attract bidders.
- xiii. Release of about 1 Million Sq. Km. (SKM) 'No-Go' area in offshore which were blocked for exploration for decades.
- xiv. Government is also spending about Rs.7500 Cr. for acquisition of seismic data in onland and  offshore  areas  and  drilling  of  stratigraphic  wells  to  make  quality  data  of  Indian Sedimentary  Basins  available  to  bidders.  Government  has  approved  acquisition  of additional  2D  Seismic  data  of  20,000  LKM  in  onland  and  30,000  LKM  in  offshore beyond Exclusive Economic Zone (EEZ) of India.