If we look at the map of India, oil wells are present from Digboi in Assam to Samandar (Mumbai High) in Mumbai and the coasts of Gujarat. Despite this, a big question often arises in the mind of the common man that when we have oil in our land and sea, then why do we extend our hands to Arab countries or Russia? Why does India import 85% of its crude oil needs from abroad and are our wells drying up? Come, let us understand this complex mathematics in very simple language.

The huge gap between domestic production and growing consumption

The history of crude oil production in India is quite old, but the problem is that our production is very small in front of our increasing appetite. At present India is the third largest oil consumer country in the world. Millions of barrels of oil are required every day to run our refineries and turn the wheels of the country’s vehicles. The oil produced from India’s own land and sea meets only 15 to 20 percent of the total consumption. This is the reason why we have to depend on the global market for the remaining 80 to 85 percent.

Discovery of new reserves and challenge of limited resources

It is not that efforts are not being made to find oil in India, but exploration of crude oil is an expensive and uncertain process. In India, companies like ONGC and Oil India are continuously digging new wells, but the pace of discovery of new reserves is much slower than the pace of increase in our consumption. Old oil fields like Mumbai High are now crossing their maturity age, due to which the cost of extracting oil from there is increasing and the production is gradually decreasing. In comparison, it is much easier and cheaper to extract oil in countries like Iraq or Saudi Arabia.

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Oil quality and technical requirements of refinery

The crude oil coming out of the soil of every country is not the same. Some oils are ‘sweet’ (low sulfur) and some are ‘solar’ (high sulfur). India’s modern refineries, which now produce BS-VI standard petrol and diesel, require a special kind of mixture. Many times the quality of domestic oil is not what is required to make high grade fuel. Therefore, to fully utilize their capacity and prepare fuel of international standard, refineries import different grades of oil from abroad.

Economic equations and mathematics of strategic oil purchases

Importing foreign oil is not just a compulsion, sometimes it is also a big economic benefit. Recently, during the Russia-Ukraine war, India has bought oil from Russia at a huge discount. When we get crude oil in the foreign market at a price lower than its production cost or at a competitive price, it proves to be better for the country’s economy and foreign exchange reserves. Apart from this, India also has to remain a part of the global oil trade to maintain better relations with the Gulf countries and ensure its energy security.

Future preparedness and importance of strategic reserves

India knows that being completely dependent on imports is risky, so the government is creating ‘Strategic Petroleum Reserve’ i.e. emergency oil reserves. Under this, oil has been stored in huge tanks under the ground in places like Visakhapatnam and Mangaluru, which is useful in case of war or supply stoppage. Also, the government is emphasizing on ethanol blending and electric vehicles so that the import bill of crude oil can be reduced. Until India fully prepares alternative routes for its energy needs, foreign oil will remain our compulsion.

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Imagine, what would happen if one day suddenly it is written on the petrol pump that the fuel is out. Major economies of the world are dependent on oil, but the reserves of many countries are decreasing rapidly. In such a situation, the question arises that in which countries can petrol and diesel run out first? And where do India-Pakistan stand in this list? Latest figures show that countries which have low reserves and high consumption are in real danger.

Why do oil reserves become power?

In today’s world, crude oil is not just a fuel but is the backbone of the economy. If there is even a slight stoppage in supply, prices go up and the impact falls directly on the pockets of the common man. For this reason, every country looks at its oil reserves as a protective shield.

Globally, there are more than 1.7 trillion barrels of proven oil reserves. According to the current consumption, they can last for about 47 to 50 years, but this is an average picture. The real story is hidden in the different circumstances of every country.

Which countries may run out of oil first?

Reserve-to-production ratio i.e. the ratio of reserves and production estimates how many years a country’s oil can last. In countries where production is high and reserves are low, oil can run out quickly.

If new sources are not found, earlier industry estimates for countries like Argentina, Indonesia and Mexico have suggested that their traditional oil reserves may be exhausted in about 10 to 12 years. Even the old reserves of big producing countries like China and Angola are considered limited. Pressure is also increasing on countries like Malaysia and Algeria.

Regarding the conventional oil reserves of United Kingdom and Italy in Europe, it is also estimated that these may decrease significantly in the coming 10 to 15 years. Australia has very little domestic reserves and fuel storage there is considered to be needed only for a few weeks, so it has to depend on imports.

However, it is important to keep in mind that depletion of oil reserves does not mean complete depletion, rather it means depletion of economically cheap and easily extracted oil.

At what position is India?

India is the third largest oil consumer in the world, but in terms of its reserves, India does not come among the top countries. The amount of proven oil reserves that India has is equal to about 2 to 3 years of its annual consumption.

India imports about 85 to 88 percent of its crude oil requirement from abroad. This is the reason why movements in the global market quickly impact India.

Recently, Petroleum Minister Hardeep Singh Puri told Parliament that India’s strategic petroleum reserves and other stocks combined can meet the country’s needs for about 74 days if there is a major disruption in supply. This means that India is not completely empty, but it will be difficult to go for a long time without imports.

situation of pakistan

Pakistan is said to have proven oil reserves of around 0.5 billion barrels and ranks very low in the global list of reserves. Compared to its annual consumption, its domestic reserves are only equal to about one to one and a half years.

Pakistan is also dependent on imports for crude oil and refined products. Apart from this, the domestic reserves of natural gas are also gradually decreasing, which are estimated to decrease in the next two decades, hence energy security remains a big challenge for Pakistan.

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