“Pricing of gas is a big challenge in the country. When we declared the last gas pricing formula, we have committed to <g data-gr-id="37">give</g> some additional premium for gas produced in difficult areas (ultra-deep water and deep water). We will be publishing the premium formula shortly,” Pradhan told reporters on the sidelines of ‘fourth National Convention: Oil & Gas India 2015’ organised by India-Tech foundation here.The premium will be given in new gas discovery, he said. The government had earlier said all new discoveries in ultra-deep water areas, deep water areas, high pressure and <g data-gr-id="35">high temperature</g> areas would be given a premium price over the price to be determined as per gas pricing formula.
The government is also considering new bidding rounds for oil and gas discoveries, he said. “At a time when oil prices are going down, we need to come out with an appropriate policy for oil and gas exploration and production. By the end of <g data-gr-id="30">current</g> financial year, we will prepare documents for next round of major assets bidding process for discovered marginal fields,” Pradhan said.
The Modi government’s Make in India policy will take manufacturing to new heights and there will be a huge requirement of energy, Pradhan said, adding that as per the estimates in the next 15 years there will be huge demand for petroleum products. “We have finalised scheme for increasing local petroleum production. The government’s priorities are <g data-gr-id="28">more</g> overseas investment in Indian companies and focus on energy conservation,” he said.
“The country also needs equity oil in the country. We have made USD 30 billion worth investment in 30 countries through joint ventures but no equity oil. We have to think of equity oil, so we can get cheaper oil,” he said.
Foreign direct investment (FDI) in the petroleum and natural gas sector witnessed an almost ten-fold jump in <g data-gr-id="31">financial year</g> 2014-15 as compared to the preceding fiscal year, touching Rs 6,473.22 crore. The government is encouraging foreign investment to supplement domestic investment and technological capabilities.
‘India's oil import dependence may hit 90% in two decades’
India’s dependence on imports to meet its oil needs is expected to touch 90 per cent in next two decades and the country needs to diversify its energy basket through use of alternative fuels, <g data-gr-id="90">an</g> India Tech-PwC report has said. At present, India imports 79 <g data-gr-id="91">per cent</g> of its oil needs, and spent USD 138.3 billion on the same in 2014-15 fiscal. “Given the current trend in domestic oil production, dependence on imports is expected to reach 90 <g data-gr-id="92">per cent</g> in the next two decades. A higher percentage of GDP will need to be spent on oil imports, further increasing India’s vulnerability to price shocks,” the report said. Stating that the economy can’t be fully insulated against external shocks, the impact of such shocks can be limited if dependence on oil imports is reduced.
“This essentially calls for an increase in domestic oil production as well as the securing of more reserves overseas. “While increasing domestic oil production has its limitations, the focus should be on diversifying India’s energy basket through alternative fuels such as coal bed methane, hydrogen, shale gas and ethanol blended fuel, as well as improving extraction efficiency by infusing technology and bringing new domestic discoveries into production,” it said.
The report said significant efforts should be undertaken to shore up India’s overseas oil reserves by encouraging Indian oil companies, especially the national oil companies (NOCs), to scout for potential oil reserves in foreign countries. “Given that oil is a perfectly traded commodity, equity oil helps offset the effect of stagnating domestic production and acts as a hedge against rising oil prices. The slump in global oil prices is a good opportunity for India to acquire assets overseas,” it said.
If India is to reduce import dependence, this window of opportunity should not be missed. India Tech-PwC said for companies operating in multiple countries, it was imperative to identify which risks they are exposed to and where those risks exist.