FY2015-16 will be remembered as the year when global oil prices bottomed out. In Feb 2016, crude oil prices reached a 23 year low. This fall in prices was due to several geo-political factors and a surplus in oil production, which was partly a result of falling demand for oil. Like many oil & gas companies around the world, for Cairn too, lower oil prices resulted in an erosion of our revenues by nearly 70%.


In response, we doubled down on projects that helped enhance our production, and temporarily stopped our exploration activities. The slowdown allowed us to focus on enhancing the skillsets of our employees and devote energies to improve our management systems. A lot of work was undertaken in the fiscal year to improve aspects related to workforce health and safety, improving the integrity of our assets and processes, improving our waste handling procedures and ensuring that our water is being sourced from sustainable sources.


However, irrespective of the downturn in the oil & gas sector, India has continued to remain an economic bright-spot in the global economy. This means that as the economy grows, India will continue to experience a growth in demand for hydrocarbons. With oil & gas contributing to nearly 35% of India’s total energy mix, the country will continue its dependence on importing crude and natural gas. In FY2015-16, India imported US$ 64 billion  of crude oil. While this number is significantly reduced from last year (2014: US$ 133 billion), due to the lower oil prices, it still forms a large portion of India’s import bill. In such a scenario, Cairn’s domestic hydrocarbon production has helped the country save over US$ 3 billion of its foreign exchequer. Additionally, we have contributed over US$1.6 billion to the government exchequer, thereby adding to the funds used by the government for infrastructural and social development.