CRUDE OIL PRICES AND PRODUCTION
(a)and(b): The international price of crude oil has been on an increasing trend during the last few years. The annual average price of Indian basket of crude oil during the last three years and the current year is given below:
Year Average Crude oil price
(Indian Basket)$ per barrel
2008-09 83.57
2009-10 69.76
2010-11 85.09
2011-12 112.73
(up to 29th
July 2011)
(c)to(e): Several measures have been taken by the Government to accelerate the production of natural gas in the country, which includes the following:
(i) Carving out more and more areas for exploration for offer under various rounds of New Exploration Licensing Policy (NELP) and Coal Bed Methane Policy (CBM).
(ii) Quicker development of discovered reserves for enabling commencement of production.
(iii) Use of stimulation techniques for increasing production from existing fields.
(iv) Application of Enhanced Oil Recovery (EOR)/ Improved Oil Recovery (IOR) techniques for increasing recovery factor from existing fields.
(v) Arresting decline from ageing fields.
IMPORT OF CRUDE OIL
a) The quantum of crude oil imported by India during the last three years is given below.
Year Quantity (Thousand Metric Tonne)
2008-09 132775
2009-10 159259 +19.9%
2010-11 163594 +2.72%
Major quantity of crude oil is imported from Saudi Arabia, Iran, Iraq, Kuwait, Nigeria, UAE, Oman, Qatar, Venezuela, Angola, Algeria, Malaysia, etc.
(b) The domestic Oil Companies have intimated that the recent turmoil in Libya and Egypt has not adversely affected the Crude Oil Supply in India as the import of crude oil from these countries is very low. The crude oil imported from these countries was only about 2% of total crude oil imports in the country during 2010-11.
c) To deal with the situation of rise in international oil prices and keeping in view the domestic inflationary conditions, the Government is modulating the retail selling prices of Diesel, PDS Kerosene and Domestic LPG. This is resulting in under-recoveries to public sector Oil Marketing Companies (OMCs) on sale of these products. The OMCs are currently incurring under-recoveries 6.06 per litre on Diesel, 23.74 per litre on PDS Kerosene and 247 per cylinder of Domestic LPG.
The Government has also eliminated 5% Customs Duty on crude oil with corresponding reduction in Customs Duty on petro products and reduced Excise Duty on Diesel by 2.60 per litre effective 25.06.2011. The remaining Excise Duty of 2.06 per litre on Diesel is earmarked towards Road and Education cess.
HIKE IN PRICES OF PETROLEUM PRODUCTS
(a): The prices of sensitive petroleum products i.e. Petrol, Diesel, Kerosene and Domestic LPG in India in comparison to other countries are as under–
(Price in Indian Rupees)
Petrol Diesel PDS Domestic
Kerosene LPG
India (Delhi) 63.70 41.29 14.83 399.00
Pakistan1 41.81 46.70 44.06 757.04
Sri Lanka1 50.30 34.37 24.67 863.40
Bangladesh1 44.80 27.32 27.32 469.24
Nepal1 63.24 45.38 45.38 819.60
USA2 43.59 46.60 NA NA
France2 96.97 71.26 NA NA
Germany2 98.20 75.01 NA NA
United Kingdom2 98.67 84.64 NA NA
Italy2 98.53 75.40 NA NA
Sources:
1. Price of Pakistan, Sri Lanka, Bangladesh and Nepal are as per Indian Oil Corporation Ltd.
2. Prices of Petrol and Diesel in USA, France, Germany, United Kingdom and Italy are as per International Energy Agency (IEA) report “End-use petroleum product prices and average crude oil import costs” for June 2011.
Retail selling prices of petroleum products in China and Malaysia are not available.
Whereas the retail selling prices of PDS Kerosene and Domestic LPG in India are the lowest in comparison to neighboring countries, the retail selling price of Diesel is comparable with prices in neighboring countries and much lower than the prices in European countries.
(b): The prices of crude oil and petroleum products in the international market fluctuate on daily basis depending on several factors including demand and supply conditions in the world. The minimum, maximum and the annual average price of Indian basket of crude oil in the international market during the last 3 years and the current year (upto August 1, 2011) are given below:
($/barrel)
Minimum Maximum Average
2008-09 35.83 142.04 83.57
2009-10 46.95 80.94 69.76
2010-11 68.06 113.09 85.09
2011-12 102.25 122.07 112.81
(upto 01.08.2011)
Since India imports about 83% of its crude oil requirements, the international oil prices necessarily have a bearing on the domestic prices of petroleum products. The Government does not have any control on the international prices of crude oil and petroleum products. However, in spite of the rising international oil prices, the domestic retail selling prices of sensitive petroleum products, such as Diesel, PDS Kerosene and Domestic LPG in India are consciously being maintained at lower levels. The details of the revision in the retail selling prices of Petrol, Diesel, PDS Kerosene and Domestic LPG at Delhi during the last 3 years are given in the Annexure.
(c) and (d): In view of the high level of international oil prices, the retail selling prices of sensitive petroleum products in India have not been increased in line with the movements in international oil prices as is reflected in the Table below:
Percentage increase in international oil prices and domestic retail selling prices
of sensitive petroleum products
Period Indian Crude Basket Changes in Domestic Retail Selling Prices
Petrol Diesel PDS Domestic
Kerosene LPG
May 2004 to 212% 89% 90% 65% 65%
July 2011
Based on the recommendations of the Kirit Parikh Committee, the Government has made the price of Petrol market-determined both at the Refinery Gate and at the Retail level with effect from 26.06.2010.Since then, the Public Sector Oil Marketing Companies (OMCs) take appropriate decisions on the pricing of Petrol in line with the international prices and market conditions.
However, the Government continues to modulate the retail selling prices of Diesel, PDS Kerosene and Domestic LPG in order to insulate the common man from the impact of rise in international oil prices and the domestic inflationary conditions. As a result, the OMCs are currently incurring under-recoveries `6.06 per litre on Diesel, `23.74 per litre on PDS Kerosene and `247 per cylinder of Domestic LPG. At these rates, the Public Sector Oil Marketing Companies are incurring daily under-recovery of `246 crore and if the average price of the Indian Basket of crude oil remains at around $110/bbl during 2011-12, their total under-recovery is expected to be of the order of `1,21,915 crore.
(e): To insulate the consumers from the high and volatile international oil prices, the Government has eliminated 5% Customs Duty on crude oil with corresponding reduction in Customs Duty on petro products and reduced Excise Duty on Diesel by `2.60 per litre effective 25.06.2011. The remaining Excise Duty of `2.06 per litre on Diesel is earmarked towards Road and Education cess.
PROCESSING COST OF PETROL AND DIESEL
(a) and (b): Refining of crude oil is a process industry where crude oil constitutes around 90% of the total cost. Crude oil is processed through numerous processing units such as Crude Distillation Unit (CDU), Vacuum Distillation Unit (VDU), Fluid Catalytic Cracking Unit (FCC), Hydro-cracker, Coker unit, Lube Unit etc. Each of these units produces intermediate product streams, which require extensive reprocessing and blending. Finished petroleum products are produced from a blend of various intermediate streams and hence, production cost is not assigned to individual refined products.
(c) and (d): Based on the recommendations of the Rangarajan Committee, the Refinery Transfer Price (RTP) for Petrol and Diesel are fixed based on Trade Parity Price w.e.f 16th June 2006. The price of Petrol was made market-determined effective from 26.6.2010. Subsequent to de-control of petrol pricing, as the price of Petrol in the international market has been rising consistently in the recent months, Public Sector Oil Marketing Companies have been revising the price of Petrol.
The Retail Selling Price(RSP) of Petrol and Diesel is calculated by taking into account the following factors:
a) Price paid to refinery on trade parity basis b) Inland freight upto the market c) Marketing Margin d) Dealers commission e) Excise duty f) Value Added Tax and local levies
The current RSP of Petrol is Rs. 58.37/litre and Diesel is Rs. 37.75/litre at Delhi. The breakup of the current retail price build up of Petrol and Diesel at Delhi is given as under:
S. No. Particulars Petrol Diesel
(Rs./litre) (Rs./litre)
1. Price without Customs Duty, Excise duty 31.59 26.11
and Sales tax components
Central Taxes
2. Customs Duty based on 1st Fortnight 2.46 2.27
of Mar’2011
3. Excise Duty including 3% education
cess 14.78 4.74
4. Total Central Taxes 17.05 7.20
States Taxes
5. Sales Tax 9.73 4.44
6. Total State Taxes 9.73 4.44
7. Total Taxes (4+6) 26.78 11.64
8. Retail Selling Price at Delhi (1+7) 58.37 37.75
# Sales tax on Diesel is inclusive of Pollution Cess of Rs.0.25 per litre
The RSP of Diesel continues to be regulated by the Government. The public sector oil marketing companies are currently incurring an under-recovery of Rs. 11.16/litre on Diesel (based on the Refinery Transfer Prices applicable for the 1st fortnight of March 2011).
TAXES LEVIED ON PETROLEUM PRODUCTS
(a): The details of duties and taxes in the retail selling prices of Diesel, PDS Kerosene and Domestic LPG at Delhi as on 1.08.2011 are as follows:
Diesel PDS Kerosene Domestic LPG /litre /litre /Cyl.
Price before taxes 32.74 12.99 373.41
Customs Duties 0.74 0.00 0.00
Excise Duty 2.06 0.00 0.00
Total Central Taxes 2.80 0.00 0.00
State Taxes 4.84 0.71 0.00
Dealers Commission 0.91 1.13 25.83
Retail Selling Price (Rounded off) 41.29 14.83 399.00
The component of States taxes varies from State to State.
The total contribution of petroleum sector to the Central and State Governments Exchequer during the last three years is given below:-
(`crore)
Particulars 2008-09 2009-10 2010-11
Contribution to Central Exchequer 93,513 1,11,779 1,36,497
Contribution to State Exchequer 68,285 72,082 88,997
Total Contribution to Exchequer 1,61,798 1,83,861 2,25,494
The date of the current year is not yet available.
(b)to(c): The Central Government requested the State Governments on several occasions to rationalise their taxes on petroleum products. At the time of price revision effective 25th June 2011 also, Central Government while reducing Customs and Excise Duties, expressed hope that State Governments would reduce the State levies. In response, 13 State Governments have reduced State VAT/Sales tax on Diesel/ PDS Kerosene/ Domestic LPG as per the details given in annexure.
OIL AND GAS RESERVES OF THE COUNTRY .
(a) The proved and probable reserves of oil and gas in the country is as under:-
Oil in Million Metric Ton (MMT) Gas in Billion Cubic Meter (BCM)
Onshore Offshore Onshore Offshore
450.6 277.7 290.5 938.3
(b) A total of 1069.9 MMT oil and 723.3 BCM gas has been produced in the country.
(c) The part of oil and gas reserves are as under:-
Oil (MMT) Gas (BCM)
Public Sector
ONGC 456.4 731.4
Oil 148.8 70.8
Private/JV 123.0 426.6
Total 728.2 1228.8
(d) For private sector/Joint Ventures the reserves of oil and natural gas in Arunachal Pradesh is 3.58 MMT, Assam is 2.02 MMT, Rajasthan is 82.28 MMT, Gujarat is 15.5 MMT and for offshore is 446.51 MMT of oil and oil equivalent gas.
INDIGENOUSLY SOURCED PETROLEUM
(a) Indigenous production and Import dependence percentage of petroleum products availability from domestic sources during the last three years i.e. 2008, 2009 and 2010 is given in Annexure.
(b) & (c) Under the PSC regime the position of reserves of oil and oil equivalent of natural gas (including CBM- coal bed methane) as on 01.04.11 are as under.
Initial In-Place Reserves: 2029.38 MMT (O+OEG)
Ultimate Recoverable Reserves: 835.56 MMT (O+OEG).
Balance recoverable Reserves: 647.22 MMT (O+OEG).
No reserves of shale gas has yet been established. India is unlikely to become self-sufficient in meeting the growing demand for petroleum products from indigenous sources in near future.
Indigenous production and Import Dependence (%)
(Million Metric Tonne)
2008-09 / 2009-10 / 2010-11Total Consumption / 133.6 / 138.2 / 141.8
Indigenous crude processing / 28.8 / 28.9 / 33.3
Products from Indigenous crude / 27.1 / 27.2 / 31.3
Products from Fractionators / 4.2 / 4.4 / 4.2
Total Indigenous production / 31.3 / 31.6 / 35.5
% Self Sufficient / 23.4 / 22.8 / 25.0
% Import Dependence / 76.6. / 77.2 / 75.0