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

Sorry! There are no related views on news for this company/sector.

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE OIL & GAS


Sep 22, 2020 (Close)

S&P BSE OIL & GAS 5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS