Highlighting import dependence, India’s crude oil output has declined for the eleventh year in a row in 2025–26. Natural gas production has also slipped for the second consecutive year. The decline in output was largely due to depletion in older fields and the absence of significant new discoveries.The sustained fall in domestic production has pushed up reliance on imports. The dependence on imports has reached 89 per cent for crude oil and 51 per cent for natural gas during the year. The US-Iran war has highlighted this vulnerability, as sourcing supplies became more challenging. Refiners had to pay higher prices for cargoes and still faced shortages in March.
Crude Oil, Gas Output Falls
Over the years, the government has rolled out many reforms that are aimed at boosting exploration activity. These include setting up a national geological data repository, simplifying regulatory and environmental approvals, and introducing fiscal frameworks that provide a larger share of returns to explorers.Also Read | Iran war: Trump sanctions waiver or not – why India continues to buy Russian oilHowever, despite these efforts, global oil companies, known for bringing in both capital and advanced technology, have shown limited participation. Most licensing rounds in the past decade have been dominated by domestic public sector firms, according to an ET report.According to data from the Ministry of Petroleum and Natural Gas, crude production fell 2.5 per cent to 28 million metric tonnes in 2025–26. This marks a cumulative drop of 22 per cent since 2014–15, when the downward trend first began, the report said.Natural gas output in the country declined 3.7 per cent to 34,776 million metric standard cubic metres in 2025–26. Over a longer period, production has seen a steady contraction, falling 40 per cent from 47,555 mmscm in 2011–12 to 28,672 mmscm in 2020–21, following an unexpected drop in output from the KG-D6 operated by Reliance Industries.Although the commissioning of new fields in the same block led to a 19 per cent year-on-year increase in national output in 2021–22, production from these assets has since stabilised. Combined with declining yields from legacy fields operated by Oil and Natural Gas Corporation, this has continued to weigh on overall gas output. An industry executive attributed the ongoing decline primarily to the absence of any major discoveries over the past decade. Oil and gas reserves naturally diminish over time, and without fresh finds being developed, maintaining production levels becomes increasingly challenging.He also pointed out that companies have not moved quickly enough to commercialise the resources they have already identified, noting that faster development could have helped sustain output.Another industry executive said that concerns over policy unpredictability, along with relatively modest resource prospects, have discouraged investment. Reviving oil and gas production in India will require significant fresh spending on exploration, he added.
