Persistent contraction in domestic crude oil and natural gas output alongside rising refinery throughput poses energy-security challenges for India. Examine.

In September 2026, the Index of Core Industries showed Refinery Products up 10.3%, while Crude Oil fell 1.4% and Natural Gas fell 4.6%. Domestic crude and gas output has fallen year-on-year in all 13 months since September 2025 [1]. Refining is growing, but it runs increasingly on imported oil, and this weakens India's energy security.

Nature of the Divergence

• Import-fed refining: when refineries process more crude while domestic wells produce less, the extra crude has to be imported [1].
• Structural decline: the government has told Parliament that ageing ONGC and OIL fields are naturally depleting. This problem dates back at least to 2015 [2].
• Masked in data: Refinery Products have an index weight of 22.572, against 7.43 for crude and 3.841 for gas. The headline index therefore rewards refining and hides the fall in upstream output [1].

Energy-Security Challenges

• Route vulnerability: before the 2026 West Asia crisis, about 45% of India's crude imports passed through the Strait of Hormuz, and that route was disrupted [3].
• Gas–fertiliser chain: the Natural Gas (Supply Regulation) Order, 2026 guaranteed fertiliser plants only at least 70% of their past six-month average gas use [4]. Urea plants received just 62% of their gas requirement until spot purchases raised this to 76% [5]. Fertiliser output fell 11.7% in September 2026 [1], which affects food security.
• Macroeconomic strain: more imports mean a larger import bill paid in dollars. This adds pressure on the current account deficit and the rupee, and raises the fertiliser subsidy bill.
• Strategic paradox: India's ambition to become a refining hub rests on feedstock it does not control.

Way Forward

• Revive upstream output: redevelop mature fields, use improved and enhanced oil recovery (IOR/EOR), and develop marginal fields in clusters [6].
• Diversify sources: extend to crude and LNG the supplier diversification used for LPG in 2026 [3].
• Buffers: expand strategic petroleum reserves and set up long-term LNG contracts.
• Cut demand: raise ethanol blending, speed up electrification, and scale up green hydrogen and green ammonia for fertilisers.

Refinery growth without upstream growth turns a domestic production gap into an exposure to foreign supply routes. Gas rationing and spot purchases only share out a shortage. Lasting energy security needs stable domestic production, diversified imports and demand-side change. This is in line with SDG 7 and the goal of an Aatmanirbhar energy economy.