A parliamentary committee has questioned whether rising capital expenditure in India’s oil and gas sector is translating into higher domestic production, noting that crude oil output has continued to decline despite a sharp increase in investments.
It has asked the petroleum ministry to submit a detailed report explaining how recent exploration reforms and newly awarded blocks will help raise production.
In an action taken report tabled in Parliament on Thursday, the committee on public undertakings noted that capital expenditure by petroleum and natural gas public sector undertakings (PSUs) rose from ₹1.3 lakh crore in 2020-21 to a projected ₹1.7 lakh crore in 2024-25, while domestic crude oil production is expected to decline to 28.7 million metric tonnes (MMT) in 2024-25 from 34.2 MMT in 2018-19.
The observations come weeks after the Centre approved the ₹ 84,000 crore Samudra Manthan national offshore exploration scheme to step up deepwater oil and gas exploration and reduce India’s dependence on imported crude.
With India importing nearly 90 per cent of its crude oil requirement, the panel said it was important that higher investments result in measurable gains in domestic production.
The committee said the ministry’s reply listed several policy initiatives but did not adequately explain whether the increased spending was translating into higher output. Describing the response as interim, it sought a comprehensive report on the production gains expected from newly awarded exploration blocks and major capital investments over the medium term.
While acknowledging that exploration projects have long gestation periods and that mature oilfields naturally witness declining output, the panel said such investments should be backed by clear performance benchmarks, periodic evaluation and accountability mechanisms.
“The real returns on these massive investments must reflect in reversed production curves – changing the trajectory of oil or gas output from a period of continuous decline to a period of growth or stabilisation,” the report said.
