India has significantly increased its budget allocation for crude oil refining and strategic petroleum reserves (SPR) for the fiscal year 2024-25, highlighting its focus on boosting domestic energy production and reducing import dependence.
Here are the key points from the recent budget announcement:
Increased budget allocation for the Oil Ministry
The Indian government has allocated 1.19 trillion rupees ($14.2 billion) to the Oil Ministry for the 2024-25 fiscal year, an increase from 1.12 trillion rupees in the revised 2023-24 budget, according to Argus.
Allocations to State-Controlled refineries
Indian Oil Corporation (IOC): Allocated 273 billion rupees for 2024-25, up from 270 billion rupees.
Bharat Petroleum (BPCL): Received 110 billion rupees, an increase from 95 billion rupees.
Hindustan Petroleum (HPCL): Allocated 107 billion rupees, up from 102 billion rupees.
Despite these increases, no capital support was allocated to oil marketing companies due to their record profits in 2023-24.
Focus on reducing import dependence
India's crude import dependence slightly decreased to 88.3% in April-June 2024 from 88.8% a year earlier. Crude oil imports during January-June 2024 rose by about 1% compared to the previous year, reaching 4.65 million barrels per day (b/d).
Upstream investments
ONGC: Allocated 308 billion rupees for 2024-25, up from 305 billion rupees.
Oil India: Increased allocation to 68 billion rupees from 56 billion rupees in the previous budget.
Strategic Petroleum Reserve (SPR)
The budget allocation for India's SPR received a significant boost with 4,080 crore rupees for cavern construction in its second phase, up from 400 crore rupees previously.
The first phase of the SPR included storage facilities at Vishakhapatnam (1.33 million tonnes), Mangalore (1.5 million tonnes), and Padur (2.5 million tonnes).
Exploration and licensing initiatives
India is set to offer 25 oil and gas blocks in the 10th round of bidding under the Open Surface Licensing Program (OALP) of the Hydrocarbon Exploration and Licensing Policy.
This follows the ninth round, where 28 blocks covering 136,596.45 km² were offered.
In the eighth OALP round, ONGC secured seven out of ten exploration block areas. The remaining blocks were awarded to a consortium of Reliance Industries and BP, Oil India, and Sun Petrochemicals.
LPG subsidies
A provision of 119.25 billion rupees was made for LPG subsidies for 2024-25, slightly down from 122.4 billion rupees in the previous year.
India's increased budget allocations and strategic initiatives in oil exploration, refining, and SPR construction reflect its commitment to enhancing energy security and reducing import dependence. These steps are crucial for meeting the country's growing energy demands and ensuring a stable supply chain.
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