India's crude oil production has declined for the eleventh consecutive year in 2025-26, while natural gas output also slipped for the second straight year, highlighting the country's growing dependence on imports. The sustained fall in domestic production has pushed import dependence to 89 percent for crude oil and 51 percent for natural gas during the year.
Reasons for Decline
The decline in output was largely due to depletion in older fields and the absence of significant new discoveries. An industry executive attributed the ongoing decline primarily to the lack of major discoveries over the past decade. Oil and gas reserves naturally diminish over time, and without fresh finds being developed, maintaining production levels becomes increasingly challenging.
Impact of Global Events
The US-Iran war has highlighted this vulnerability, as sourcing supplies became more challenging. Refiners had to pay higher prices for cargoes and still faced shortages in March.
Production Data
According to data from the Ministry of Petroleum and Natural Gas, crude production fell 2.5 percent to 28 million metric tonnes in 2025-26. This marks a cumulative drop of 22 percent since 2014-15, when the downward trend first began. Natural gas output declined 3.7 percent to 34,776 million metric standard cubic metres (mmscm) in 2025-26.
Over a longer period, production has seen a steady contraction, falling 40 percent from 47,555 mmscm in 2011-12 to 28,672 mmscm in 2020-21, following an unexpected drop in output from the KG-D6 block operated by Reliance Industries. Although the commissioning of new fields in the same block led to a 19 percent year-on-year increase in national output in 2021-22, production from these assets has since stabilised. Combined with declining yields from legacy fields operated by Oil and Natural Gas Corporation (ONGC), this has continued to weigh on overall gas output.
Government Reforms and Industry Response
Over the years, the government has rolled out many reforms aimed at boosting exploration activity. These include setting up a national geological data repository, simplifying regulatory and environmental approvals, and introducing fiscal frameworks that provide a larger share of returns to explorers. However, despite these efforts, global oil companies, known for bringing in both capital and advanced technology, have shown limited participation. Most licensing rounds in the past decade have been dominated by domestic public sector firms.
An industry executive pointed out that companies have not moved quickly enough to commercialise the resources they have already identified, noting that faster development could have helped sustain output. Another industry executive said that concerns over policy unpredictability, along with relatively modest resource prospects, have discouraged investment. Reviving oil and gas production in India will require significant fresh spending on exploration, he added.
