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Global oil CEOs seek reforms, promise big investments to PM Modi

 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 regulatory board.

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 January 2016.

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.


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