India’s biggest oil, gas reserve sees 40% dip in production, officials blame Covid

Published on Aug 20, 2021 05:30 PM IST

Oil prices in the country have been on the rise for the past few months due to an increase in crude oil prices in the international market. In some places in Rajasthan, such as Sri Ganganagar, not very far from oil producing Barmer, the price of petrol is close to ₹110 per litre

Representational image. (REUTERS File)
Representational image. (REUTERS File)

Oil and gas production in Rajasthan witnessed a 40% dip in the past two years due to less extraction, primarily due to Covid-19, officials said, even as the government plans to further expand oil exploration in the region.

Oil prices in the country have been on the rise for the past few months due to an increase in crude oil prices in the international market. In some places in Rajasthan, such as Sri Ganganagar, not very far from oil producing Barmer, the price of petrol is close to 110 per litre.

Barmer is the country’s biggest source of oil and natural gas, and contributed 1,904.79 crore to state revenue in 2020-21, down from 3,883.22 in 2018-19. This means that oil fields contributed 10 crore a day to the state government, whose other big revenue sources are mines, excise, and stamp and registration.

“The state revenue from oil declined majorly due to less extraction of oil, affecting the production and crude oil prices, and partly Covid-19,” an official said, talking about the reasons for the dip in the revenue.

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Barmer’s Gudamalani area has reserves of 10 billion cubic metres of gas, of which only 30% has been explored. India’s total oil and gas reserves are 28.1 billion cubic metes, according to the petroleum ministry website.

The official said that in April, May and June 2020, crude oil prices witnessed a huge fall in the international market. But despite the pandemic, in 2021-22, as the prices and production were stable and crude oil prices improved in July 2021, theexpected revenue was received. “The petroleum reserves are on a natural decline, which is slowing down production,” the official quoted above said.

The government, till July this year, has received a revenue of 1,193 crore. It has set a target of 3,500. The official said the demand for oil has started increasing and the price of crude oil has also improved. He added that enhanced oil recovery techniques are being used to maintain production--all these factors have led to an increase in revenue.

However, despite the fluctuation in state revenue, the one-and-a-half decade of oil exploration in Barmer has changed the small nondescript town. Barmer has transformed from a small hamlet into a glitzy city, said Rakesh Sharma, a local political activist.

The discovery of crude oil and coal in early 2004 fuelled Barmer’s growth, as oil majors Cairn India and Raj West Power invested heavily, generating thousands of new jobs in a city of 1.5 million people, about 540km from Jaipur. The companies acquired huge chunks of land, jacking up land prices by five to 10 times in a short period. Now, an upcoming oil refinery worth 43,129 crore is expected to further hike land prices and bring another round of development in the town. Commercial production will start from the Barmer Refinery by March 2023. The refinery will process 9 million tonnes of crude oil annually. A work order of 37,464 crore has been issued for the refinery project till July 2021.

Additional chief secretary, mines and petroleum, Dr Subodh Agarwal, said inMarch 2021 the western region of the state received impetus for further development as the third gas plant of the state Rageshwari Deep Gas Plant was ready. “It would provide thousands of new jobs and boost economy of the region further in western region, which was earlier considered backward,” he said.

Due to the plant, operational now, the total production of natural gas has increased to 3.8 million cubic metres (mcm) per day (in July 2021) from 2.9mcm per day in March 2021. This would be five percent of total gas production in the country, according to the petroleum ministry website.

Agarwal said a refinery and petrochemical complex is also being set up in Pachpadra, Barmer, on 4.813 acres of land which is scheduled to start commercial production by March 2023.

“The second wave of the pandemic reduced the pace of refinery work. Till June 2021, work orders worth 37,347 crore were issued. Of this amount, 8,041.66 crore has been spent,” he said on Monday in Jaipur.

“Commercial production will start from Barmer Refinery by March 2023,” he added.

n the next few days, he said, Oil India will invest about 95 crore to explore mineral oil and natural gas in Barmer. “And upon commencement of production, the state will generate revenue at the rate of 12.5% on mineral oil and 10% on natural gas production,” he said.

The petroleum basin in the state is spread over an area of 1.5 lakh square kilometres in Barmer, Jalore, Jaisalmer, Nagaur, Sriganganagar, Hanumangarh and Churu districts. Around 1.20 lakh to 1.22 lakh barrels of crude oil and about 33 to 35 lakh cubic metres of natural gas are produced in the state every day.

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    Sachin Saini is Special Correspondent for Rajasthan. He covers politics, tourism, forest, home, panchayati raj and rural development, and development journalism.

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