EY says what helped India reduce impact of West Asia-led energy crisis: “…helped save refining costs” | Today’s news
India’s strong oil refining capacity has helped reduce the impact of the recent West Asian-led energy crisis on the domestic economy by avoiding the need for large-scale imports of refined petroleum products, an EY (Ernst & Young LLP) report said.
The report highlighted the evolution of India’s oil economy, saying that while the country’s dependence on imported oil has increased over the years, it has successfully built significant refining capacity to convert crude oil into petroleum products.
It said that “India can continue to expand its refining capacity, which has helped save refining costs if India were forced to directly import refined petroleum products”.
According to the report, India’s dependence on imported crude oil rose to over 90 percent in FY26 from 54.9 percent in FY1999. At the same time, domestic oil production declined to 26 million metric tons in FY26 from a peak of 35.9 million metric tons in FY12.
The report noted that rising demand for petroleum products increased the need for imports. Domestic consumption of petroleum, oil and lubricants (PoL) rose sharply to 243.2 million metric tons in FY26 from 90.6 million metric tons in FY1999.
Despite the increase in oil imports, India has steadily expanded its refining capabilities over the years. The report said this refining capacity helped save costs that would otherwise have been incurred if India had been forced to directly import refined petroleum products.
According to EY, the country’s energy efficiency has also improved over time. The report said that the energy intensity of Indian production, as well as the use of petroleum products in GDP, have declined over the years. This, she says, bodes well for maintaining energy-efficient growth at a relatively high level for a longer period.
Looking ahead, the report suggested that India should prepare for future supply and price shocks affecting critical commodities such as oil, gas and fertilizers by building strategic reserves.
It is recommended that India expand its strategic oil reserves to reduce vulnerability to external shocks. The report also called for a detailed strategy covering the volume of reserves, purchase plans and release mechanisms while taking into account accounting costs.
The report further states that India should continue to expand its refining capacity to enhance energy security and reduce dependence on imported refined products.
At the same time, EY noted that increasing dependence on imported oil needs to be reversed by greater use of domestically available oil resources. It also recommended accelerating the transition to greener energy options and alternative energy sources, including nuclear power.
