India, the world's fourth largest petroleum consumer and a beneficiary of the downtrend in the global oil markets, is concerned about the prospects of higher oil prices due to a record reduction in upstream investment, an industry development highlighted by the top executive of the International Energy Agency (IEA) at the G20 energy ministers meeting in Istanbul, Turkey, according to local media The Economic Times Saturday.
"We expect this year, in 2015, global oil investments to be 20 percent less than 2014," IEA Executive Director Fatih Birol told a news conference at the meeting in Istanbul, adding that "this is the biggest decline in oil history."
"As a result of this, we expect that next year, U.S. oil production will fall by 400,000 barrels per day because of projects not making economic sense ... We may well see soon upwards pressure in price," he said.
"I expect there will be adjustment of the market ... Sooner or later we will see upwards pressure," Birol commented, as quoted in The Economic Times.
India is heavily dependent on oil imports as it produces only 895,000 barrels a day or 23.7 percent of its total requirement of 3.846 million barrels a day in 2014, data from BP Statistical Review of World Energy 2015 showed. With the South Asian country importing 3.809 million barrels a day of crude oil last year, any increase in oil prices would weigh heavily on its import bills.
Given its high dependency on oil imports, India has been actively encouraged upstream petroleum companies to increase production from domestic fields. Firms such as state-owned Oil and Natural Gas Corp. Ltd. (ONGC) and privately-owned Reliance Industries Ltd. (RIL) have been active in the domestic upstream sector as they push on with their projects by capitalizing on lower costs for exploration and development in the current market.
In a related development, The Economic Times reported Monday that ONGC intends to ask for government support for its proposed $6 billion deepwater project at KG-DWN-98/2 or KG-D5 block in the Krishna-Godvari basin off India's east coast as the development is not commercially viable under current oil prices. ONGC recently submitted a field development plan (FDP) for the project to India's upstream regulator Directorate General of Hydrocarbons (DGH).
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