In­dia sets in mo­tion move to auc­tion 69 mar­ginal oil & gas fields owned by state ex­plor­ers

FICCI Business Digest - - Special Features -

Dhar­men­dra Prad­han, Min­is­ter of State for Petroleum & Nat­u­ral Gas (I/C) has said that a con­ducive busi­ness en­vi­ron­ment is based on cer­tainty, much of which comes from a sta­ble, pre­dictable and trans­par­ent pol­icy. He main­tained that all min­istries were com­mit­ted to­wards forg­ing poli­cies which were both industry-friendly and en­sured that fruits of the eco­nomic growth reached com­mon man. While de­liv­er­ing his key­note ad­dress at a 'Round­table on Hy­dro­car­bons: Un­leash­ing In­dia's E&P Po­ten­tial' or­gan­ised by FICCI in New Delhi on April 21, 2015, Prad­han said that the present po­lit­i­cal es­tab­lish­ment was a par­tic­i­pa­tory gov­ern­ment which con­stantly sought in­puts from var­i­ous stake­hold­ers in­clud­ing the industry, eco­nomic ex­perts and industry bod­ies such as FICCI. He also wel­comed sug­ges­tions from the stake­hold­ers

of the hy­dro­car­bon sec­tor.

The Min­is­ter touched upon a few im­por­tant de­vel­op­ments in up­stream oil & gas, par­tic­u­larly the shap­ing up of Mozam­bique's Rovuma basin which could po­ten­tially be­come a ma­jor gas ex­port­ing re­gion of great im­por­tance to In­dia and other parts of South Asia. Prad­han as­serted that coun­tries around the world were look­ing at In­dia not only for eco­nomic part­ner­ship, but as a torch­bearer of in­no­va­tion fo­cused on pro­vid­ing the ben­e­fits of eco­nomic growth and financial in­clu­sion to large masses of pop­u­la­tion.

Prad­han em­pha­sised that the Gov­ern­ment of In­dia re­mains com­mit­ted to incentivising new and ex­ist­ing busi­ness in ev­ery pos­si­ble way and added that in­di­geni­sa­tion of manufacturing, ex­ploita­tion of biomass and bio­fu­els and com­mer­cial­i­sa­tion of R&D were im­por­tant ob­jec­tives to be achieved for In­dia if it had to re­duce its im­port de­pen­dency to meet its en­ergy needs.

Ear­lier, Sau­rabh Chan­dra, Sec­re­tary, Min­istry of Petroleum & Nat­u­ral Gas, Gov­ern­ment of In­dia, stated that In­dia will soon auc­tion 69 mar­ginal oil and gas fields owned by Oil and Nat­u­ral Gas Cor­po­ra­tion and Oil In­dia Ltd and the two state ex­plor­ers would in­vest $6 bil­lion in ex­plo­ration and pro­duc­tion in the year end­ing March 2016, as they look to ar­rest de­clin­ing oil and gas pro­duc­tion.

Chan­dra in­formed that a high­pow­ered com­mit­tee has been con­sti­tuted for pre­par­ing a Hy­dro­car­bon Vi­sion Doc­u­ment which will be com­pleted in three months and out­line the ini­tia­tives for aug­ment­ing in­vest­ments in oil and gas pro­duc­tion.

Re­spond­ing to industry's con­cerns on 100 per cent map­ping of sed­i­men­tary basin, Chan­dra said that 52 per cent was al­ready mapped and it was de­cided that the map­ping of the rest 48 per cent would be com­pleted within five years. The process of bid­ding has started for map­ping and the gov­ern­ment had de­cided to bear the ex­pense of map­ping those sed­i­men­tary basins that are left af­ter the bid­ding.

Speak­ing on the bid­ding frame­work, he said that there was a need to cre­ate a hy­brid model with rev­enue model and it was nec­es­sary to make the pol­icy for E&P sim­ple and prac­ti­cal. Chan­dra agreed with the industry and said that a sta­ble and at­trac­tive pol­icy regime was a must for sec­tor's growth.

Dr. Jy­ot­sna Suri, Pres­i­dent, FICCI, said that the gov­ern­ment needs to put in place an en­abling en­vi­ron­ment which would en­thuse the na­tional oil com­pa­nies and pri­vate sec­tor, to ex­plore resources within our bor­ders and get­ting a fair and trans­par­ent price for ven­tur­ing into this high risk sec­tor.

She stated that at present the sec­tor is be­set with in­fir­mi­ties in reg­u­la­tory and fis­cal regime and lack of a sin­gle win­dow clear­ance which was ham­per­ing the ease of do­ing busi­ness in this im­por­tant sec­tor of the econ­omy. The dis­crim­i­na­tory tax regime be­tween oil and gas also needed to be ad­dressed to bal­ance the risk-re­ward frame­work for the op­er­a­tor.

Dr. Suri high­lighted the need for a con­cen­trated strat­egy to un­leash the do­mes­tic E&P po­ten­tial, so that the max­i­mum of en­ergy resources from within the basins could be ex­ploited. This will not only make In­dia self­suf­fi­cient in en­ergy and save pre­cious for­eign ex­change, it would help in ar­rest­ing the bur­geon­ing cur­rent ac­count deficit and cre­ate em­ploy­ment op­por­tu­ni­ties in the econ­omy, she added.

In his pre­sen­ta­tion Vipul Tuli, Di­rec­tor, McKin­sey & Com­pany, Inc., said that the gov­ern­ment and industry needed to work in tan­dem to re­vive and re­store the E&P sec­tor. He sug­gested that there was a need to ac­cel­er­ate map­ping of 100 per cent In­dia's sed­i­men­tary basins and clar­ify bid­ding frame­work for ex­plo­ration blocks. The gov­ern­ment should en­sure seam­less ad­min­is­tra­tive of ex­plo­ration and de­vel­op­ment blocks.

Tuli stated that cre­ation of a sta­ble and at­trac­tive fis­cal pol­icy would at­tract in­vest­ments to the sec­tor and added that pro­duc­tion from new and dif­fi­cult re­serves should be de­liv­ered. He added that there was a need to in­vest in tech­nol­ogy and ca­pa­bil­ity. Also industry clus­ters start­ing with ship­ping, oil­field ser­vices and key equip­ment were needed to be set up to en­hance the sec­tor's prospects.

R. S. Sharma, Chair­man, FICCI Hy­dro­car­bons Com­mit­tee, said that the industry needed mas­sive in­vest­ments in E&P sec­tor. In­dian lead­er­ship had an­nounced re­forms to boost E&P but there was a need to fast track the call for 'Make in In­dia' to achieve the de­sired re­sults. He added the gov­ern­ment needs to cre­ate a frame­work to carry for­ward the re­form agenda to win the trust of the global in­vest­ment com­mu­nity.

Naren­dra Taneja, Lead­ing En­ergy Ex­pert and Chair­man, FICCI En­ergy Se­cu­rity Group; Y K Modi, Past Pres­i­dent, FICCI and Chair­man & CEO, Great East­ern En­ergy Cor­po­ra­tion Ltd; D. K. Sar­raf, Chair­man & Man­ag­ing Di­rec­tor, ONGC; S. K. Sri­vas­tava, Chair­man & Man­ag­ing Di­rec­tor, Oil In­dia Ltd; N K Verma, Man­ag­ing Di­rec­tor, ONGC Videsh Ltd; Mayank Ashar, Man­ag­ing Di­rec­tor & CEO, Cairn In­dia; K. Venkatara­manan, CEO & MD, Larsen & Toubro Ltd.; Amit Khera, Part­ner, McKin­sey & Com­pany, Inc.; Sanjay Gupta, Di­rec­tor (Com­mer­cial), En­gi­neers In­dia Ltd.; Cap­tain B. B. Sinha, Di­rec­tor (P&A), Ship­ping Cor­po­ra­tion of In­dia and Ashish Bhandari, CEO – Oil & Gas, GE In­dia In­dus­trial Pvt. Ltd.; also shared their per­spec­tives on E&P po­ten­tial.

L to R: Dhar­men­dra Prad­han, Min­is­ter of State for Petroleum & Nat­u­ral Gas (I/C); Dr. Jy­ot­sna Suri, Pres­i­dent, FICCI and R. S. Sharma, Chair­man, FICCI Hy­dro­car­bons Com­mit­tee.

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