Economy

Covid-19 continues to hit domestic oil and gas output for second consecutive month

Our Bureau New Delhi | Updated on June 23, 2020 Published on June 23, 2020

India’s crude oil and natural gas production, as well as petroleum product output from refineries, remained muted for the second consecutive month in May due to the Covid-19 lockdowns.

Domestic crude oil production stood at 2.6 million tonne while gas production was at 2,300 million standard cubic meters during May 2020. Compared with May 2019, crude oil production is 7.06 per cent lower and gas production has fallen by 16.02 per cent.

The lower crude oil and gas production is due to the restriction of movements for field operations in onshore fields due to the lockdown, an official statement said.

This is the second consecutive month of a steep decline in domestic oil and gas production, and petroleum products output as the lockdowns had hit demand in April too.

Domestic crude oil production in April stood at 2.5 million tonne while natural gas production was at 2,161.33 million standard cubic meters. Compared with April 2019, gas production was down 18.62 per cent while crude oil production was 6.35 per cent lower.

Product output

Refinery output of petroleum products (a measure of the total crude oil processed) during May was at 17.28 million tonne, down 21.26 per cent from May 2019.

This was a slight recovery when compared with April 2020, when refinery output stood at 14.75 million tonne, down 28.78 per cent from April 2019.

Lower demand for petroleum products was the major reason for lower crude oil processing in May as businesses remained shut due to the lockdown.

This lower production trend is expected to continue in June too, but demand for petroleum products is set to recover after that. This estimate is predominantly for petrol and diesel whose nationwide demand has recovered to around 80 per cent of pre-Covid-19 lockdown levels.

Production hit because of other factors too

In addition to Covid-19, there was less than planned contribution from workover and drilling wells, rise in water cut and decline in liquid production from existing wells in May.

There was also a loss of crude oil production due the blow out at Oil India Ltd’s Baghjan well number 5 from May 27.

In Rajasthan’s oil fields, there was a delay in workover wells and production optimisation jobs due to the pandemic. There were also mechanical issues such as lift (PCP) malfunction and delayed start-up of full field polymer injection.

There was a closure of gas wells in Western offshore due to lower offtake by GAIL and in Eastern Offshore due to lower offtake by GPPC during the lockdown.

Published on June 23, 2020

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