India crude oil production falls for 11th year, gas declines again

New Delhi: India's crude oil production fell for the eleventh consecutive year in 2025-26, while natural gas output declined for the second straight year amid natural depletion in ageing fields and a lack of major new discoveries.

Crude oil production dropped 2.5% to 28 million metric tonnes in 2025-26, according to petroleum and natural gas ministry data. Output is down 22% from 2014-15, when the decline began.

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Falling domestic output has increased import dependence, which stood at 89% for oil and 51% for gas in 2025-26. The Iran war exposed this vulnerability, as securing supplies became difficult, forcing refiners to pay elevated prices for cargoes while still falling short of requirements in March.

Domestic natural gas production fell 3.7% to 34,776 million metric standard cubic metres (mmscm) in 2025-26. Output had declined steadily over the past decade, dropping 40% from 47,555 mmscm in 2011-12 to 28,672 mmscm in 2020-21 after an unexpected collapse in Reliance's KG-D6 output. The launch of new fields in the same block lifted national output by 19% year-on-year in 2021-22, but these fields have since plateaued. This, along with declines in ONGC's legacy fields, has weighed on overall production.

At the heart of the decline is the lack of major discoveries for over a decade, an industry executive said. Oil and gas fields naturally deplete, and without new discoveries being brought into production, sustaining output becomes difficult.

Companies have also been slow to monetise discoveries, he said, adding that faster development could have supported production.

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The government has undertaken several policy reforms over the past decade to attract exploration investment, including building a national geological data repository, easing regulatory and environmental clearances, and introducing fiscal regimes that offer a higher share to explorers.

However, participation by foreign oil firms-who bring significant risk capital and technical expertise-has remained limited, with most licensing rounds dominated by domestic state-run players in the past decade.

A perception of policy instability, coupled with relatively modest resource potential, has deterred investment, another industry executive said. India needs substantial investment in exploration to revive oil and gas production.