Crude oil imports to touch 85% by 2012

New Delhi, Aug 16 (UNI) The domestic crude oil imports requirement may go up to about 85 per cent by 2012 from current level of 70 per cent even though refining capacity in India is poised to increase by 58 per cent to touch 235 million tonnes (MT) in next five years from present level of about 159 MT, an industry body said.

This is in view of the growing demand of energy with little resources at India's disposal for harnessing its alternate sources, it added.

Assocham in a paper on ''Future Imperatives of crude oil scenario'' has said the country's dependence on crude oil will increase as domestic discoveries have not been taking place, while energy demand in future will multiply and rise to the level of 12-13 per cent compared to 7-8 per cent now.

''It is true that refining capacities will also register a manifold increase but for that we need a crude oil which is a scarce commodity now and will continue to be so in future too,'' said Assocham President Venugopal N Dhoot.

The paper also said the artificial ceiling on the prices of petroleum products will continue to persist in the near future and it would be difficult for the government to continue diverting development revenues to foot the burgeoning oil import bill as it will result in fiscal pressures in servicing the oil bonds.

In financial year 2005 and 2006, country's petroleum and crude oil products (POL) import bill has been growing at an average 46 per cent per year.

POL imports which accounts for 28 per cent of total imports, recorded a 47 per cent jump in value terms during fiscal year 2006, compared with fiscal year 2005, while in volume terms the growth was just 33 per cent.

The one factor contributing to this rise has been the international crude prices which begun ascending in late 2003, the chamber added.

Now as the crude oil prices have started softening, it is unlikely to retain the current level and move upwardly in next couple of weeks, Assocham said.

Despite such high dependency on oil imports, its impact on domestic prices and economic growth has remained muted so far, it said.

At present, refining capacities stands at 148.97 MT. However, some of the projects that are likely to be commissioned during 11th plan are Reliance Petroleum, 29 MT at the Jamnagar SEZ, IOC's 15 MT refinery coming up in Orissa, HPCL nine MT refinery in Bhatinda, Punjab and BPCL's six MT refinery again in Punjab.

The paper further said high economic growth prospects in China and India will ensure significantly higher international oil prices. However, the pass through of high prices on domestic consumers will be tardy as the link between oil prices and core inflation seems to have weakened within the increasing focus of monitoring authorities to offset inflation.

UNI