BUDGET WISH LIST: OIL & GAS

Sector snapshot

■ India is the largest crude oil consumer in the world after China and the US. India consumed 213 million metric tonnes (mmt) of petroleum products and 61 billion cubic metres (bcm) of natural gas in the year 2018-19 (FY19)

■ Domestic crude oil production declined to 34.2 mmt in FY19, from 35.7 mmt in 2017-18 (FY18). While natural gas production increased marginally to 32 bcm in FY19 as compared to 31.7 bcm in FY18

■ India’s import dependency on crude oil and natural gas reached 83% and 46%, respectively, during FY19

■ PNGRB granted letters of intent to 12 entities for 50 geographical areas (GAS) under 10th City Gas Distribution (CGD) bidding round

■ LPG coverage increased to 96.5% primarily due to Ujjwala Yojana

Key challenges

■ E&P business appearing lacklustre to investors: Multiple Open Acreage Licence Policy rounds conducted recently have seen limited interest from private and international oil and gas companies

■ CGD sector needs improved ecosystem: CGD GA licences have been allotted although gas availability, third-party access, swap operationalisation, contractual sustenance, and financing constraints seem to bottleneck take-off

■ New retail regulations need other regulation support: To take advantage of long-awaited liberalisation of bulk and retail fuel marketing, investors are finding out how to succeed with restricted access to products and infrastructure

■ Inadequate biofuel production capacity: Majority of biofuel projects in India are being carried out by public sector undertakings. However, private sector participation is essential for the cost to service to come down to meet blending targets

■ Gas transmission and distribution infrastructure constraints: India is missing the opportunity to benefit from low liquefied natural gas (LNG) prices due to delayed commissioning of LNG terminals and limited pipeline network

Industry-ask

■ Permitting gas trading to allow sale and purchase of gas easily and transparently. Affordable buyers would help some domestic discoveries to become commercial

■ Bringing natural gas under the ambit of classical GST

■ Building a road map for gas-based economy in order to achieve the vision of increasing the share of natural gas to 15% by 2030, from the existing 6% of the primary energy mix

■ Promote the diversification of crude oil sources and take up the issue of Asian premium with Opec