Global oil companies promised investments
running into lakhs of crores of rupees in India as
they sought a number of energy sector reforms including unified gas pricing,
inclusion of oil and gas in the goods and services tax regime and a gas tariff
The heads of more than 20 oil and gas companies and other entities met Prime
Minister Narendra Modi on Monday 9 October ‘17 and suggested at least
half-a-dozen other policy initiatives to make investments more attractive in
the country’s growing energy sector, with a focus on predictability and
sanctity of contracts.
They included CEOs and top officials from Rosneft, BP, Reliance Industries,
Saudi Aramco, ExxonMobil, Royal Dutch Shell, Vedanta, Wood MacKenzie, IHS
Markit, Schlumberger, Halliburton, Xcoal, Oil & Natural Gas Corp, Indian
Oil, GAIL, Petronet LNG, Oil India, Hindustan Petroleum, Delonex Energy, NIPFP,
International Gas Union, the World Bank and the International Energy Agency.
The companies promised investments of lakhs of crores of rupees. India’s oil
consumption growth is expected to become the fastest among all major economies
by 2035, according to the BP Statistical Review of World Energy.
Union ministers Dharmendra Pradhan and RK Singh were present at the meeting, along with
senior officials from Niti Aayog, the Prime Minister’s Office and the petroleum
and finance ministries.
Pradhan and Niti Aayog vicechairman Rajiv Kumar presented an overview of policy
reforms undertaken by the government in the energy sector at a three-hour
session, during which Modi heard observations and suggestions from oil and gas
executives. Modi previously met with top global oil company executives in
Policy Initiatives in Past 3 Years
India’s oil and gas sector has been marred by tight controls, big subsidies and
high-profile disputes, although the government has resolved practically all the
concerns of investors in recent years.
Reforms in the sector have been implemented over the past three years, starting
with deregulation of diesel prices, which reignited private sector interest in
fuel retailing. BP has obtained a licence to retail petrol, diesel and jet fuel
and plans an equal joint venture with Reliance Industries for this.
Russia’s Rosneft acquired Essar Oil’s refinery in Gujarat and a countrywide
fuel retail network for $12.9 billion earlier this year.
A policy offering higher gas prices from difficult fields has got Reliance, BP
and ONGC to announce billions of dollars of investments in their respective
deep-sea fields. A new exploration policy that offers gas pricing freedom and
the option to demarcate one’s own fields has received about 45 expressions of
interest from companies wanting to bid for the country’s energy assets.
The heads of almost all global oil companies recommended that the government
include oil and gas under GST to avoid the cascading effect of differential
pricing, NITI Aayog CEO Amitabh Kant told reporters. GST, which subsumes a
range of indirect taxes, was introduced in India on July 1.
“To this, the PM has assured that the matter needs to be discussed and the
government will speak to states on this,” Kant said, quoting Modi.
“Subjects such as the need for a unified energy policy, contract frameworks and
arrangements, requirement of seismic data sets, encouragement for biofuels,
improving gas supply, setting up of a gas hub, and regulatory issues came up
for discussion,” the PMO said in a statement.
According to Kant, the focus of the high-level meeting was four-fold: doubling
domestic production and reducing oil imports by 10% by 2022; attracting
greenfield and brownfield refineries, petrochemical plants, pipelines and LNG
terminals; securing overseas supplies through equity and longterm contracts,
and attracting foreign investment and technical expertise.
India is estimated to be a major oil driver with a 4% CAGR by 2030 as against a
world average of 1%. The big investments lined up for the sector include $10
billion by ONGC in the KG Basin, $6 billion by BP and Reliance in KG-D6, over
$4 billion by Cairn India for exploration and production in Rajasthan, Ravva
and Cambay, $40 billion by oil marketing companies in brownfield expansion and
upgrading fuel to BS-VI emission standards and another $8 billion in petroleum
and petrochemical integrated clusters.