Country heading for crude crisis? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Country heading for crude crisis?

Mar 29, 2000

During April to January 2000, crude production declined by 1.4% on a year on year basis. This follows a YoY decline of 2.8% in crude production during FY99. The concern arises from several factors.


* - Growth rates for current year refer to April - Jan period

The first of these is that with refining capacity in India growing at a fast pace, the need for imports has dramatically increased. To put this in perspective, crude throughput increased 5.2% in FY99 and 25.2% during April - February 2000. Therefore India's dependence on foreign crude has dramatically increased over the years.

Then there is the issue of the rising crude prices. With the OPEC cartel as yet unable to decide on opening the oil taps, the price of crude remain perched at levels that are three times those recorded in late 1998. Higher prices imply that there is deterioration in India's terms of trade. This is of significance as India's oil imports accounts for over 25% of the total import bill. In case the export growth were to falter, the country would be faced with the possibility of a very large current account deficit.

The last issue pertains to the domestic crude sector itself. The government has after much delay permitted private sector participation in crude drilling. However, much more needs to be doe especially to boost the productivity of existing fields, especially Bombay High. Then there is also a need to step up spending on research and exploration.

With the economy gaining pace, the demand for petroleum products will rise. In turn, the need for higher domestic crude output will be felt even more. The burgeoning oil pool deficit is just one indicator of the mess India's oil sector is in. The shortage of domestic crude is bound to balloon into a serious issue in coming years as demand rises (and domestic output continues to be bogged down by government control).

Equitymaster requests your view! Post a comment on "Country heading for crude crisis?". Click here!

  

More Views on News

5 Green Energy Stocks to Watch as India Readies for a Revolution (Views On News)

Oct 13, 2021

The excitement around green energy stocks has opened up a huge contrarian opportunity in the traditional energy space.

Top Performing PSU Stocks over the Past One Year (Views On News)

Oct 1, 2021

After a decade of underperformance, PSU stocks have woken up. Here are the best performing PSUs of past twelve months.

Linde India Shares Hits New High. Up 230%+ in One Year (Views On News)

Aug 26, 2021

Linde India shares have surged sharply in the past few trading sessions. What's causing the rally?

ONGC Logs Massive Jump in Net Profit as Crude Oil Prices Double (Views On News)

Aug 16, 2021

Rising crude oil prices compensate ONGC's fall in production.

HPCL Shares Under Pressure After Profit Declines in June Quarter (Views On News)

Aug 5, 2021

Rising crude oil prices and forex woes weigh on HPCL's quarterly numbers.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE OIL & GAS


Dec 1, 2021 03:36 PM

S&P BSE OIL & GAS 5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS