Delivering the 75th Independence Day (ID) address on August 15, 2021, Prime Minister, Narendra Modi set the country a target of 2047 – to achieve self-reliance in energy production through a mix of electric mobility, gas-based economy and making the country a hub for hydrogen production. While, electric mobility and hydrogen are futuristic areas, as regards gas-based economy, pursuit of this goal will involve increase in gas consumption to (i) meet additional energy needs for sustaining high growth and (ii) replacing polluting fuels such as coal, fuel oil etc. This could result in further increasing dependence on gas import which is already high at 50%. To prevent this and put India on the path of self-reliance, there is need for a...
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Category: Import & Export policies
Detoxify oil pricing
On October 15, 2018, interacting with global leaders from the energy sector in New Delhi, prime minister, Narendra Modi had expressed concern over the steep increase in the international price of crude oil [then the price had touched US$ 80 per barrel leading to corresponding increase in price of diesel and petrol; this even hurt BJP politically as the party lost three state assembly elections viz Madhya Pradesh, Rajasthan and Chattisgarh] and urged all leading producers/exporters to be more responsible in fixing the price to bring it down from current high to reasonable level. Then, he might not have even contemplated of a scenario wherein the price of crude would plunge to a fraction of the October 2018 level; on...
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Is the oil sector ready for competition?
Last year, Petroleum Minister Dharmendra Pradhan had set up an expert committee under Kirit Parikh to “look at various issues related to implementation of existing guidelines for grant of marketing authorization of market fuels —petrol, diesel and aviation turbine fuel (ATF), identify entry barriers, if any, for expansion of retail outlets for private marketing companies and recommend easing of fuel retailing licensing rules.” On October 23, the government announced major changes in the licensing rules. These include dispensing with the requirement of minimum investment of Rs 2,000 crore in oil or gas infrastructure — in hydrocarbon exploration and production, refining, import terminals, transportation, etc. Henceforth, “the applicant needs to have minimum net-worth of Rs 250 crore and commit to invest...
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Oil sector – is it ready for competition
Last year, the union minister of petroleum and natural gas [MPNG], Dharmendra Pradhan had set up an expert committee under Dr Kirit Parikh to “look at various issues related to implementation of existing guidelines for grant of marketing authorization of market fuels – petrol, diesel and aviation turbine fuel [ATF], identity entry barriers, if any, for expansion of retail outlets for private marketing companies and recommend easing of fuel retailing licensing rules ”. This was in the backdrop of persistent demand from various stakeholders for relaxing extant norms for granting authorization for marketing of oil products with a view to get more private players into retailing so as to increase competition, reduce price, improve services and give more choice to...
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Fuelling new partnerships
India must broaden its vision of oil security which should go beyond increasing indigenous production, to cover arrangements with other nations for assured supplies of crude and gas Despite loud talk by successive Governments about increasing domestic production of oil and gas to make India self-sufficient in energy, we are producing less than 20 per cent of our requirement. The balance, over 80 per cent, continues to be imported. This heightens our vulnerability to a point whereby the slightest disruption in any of the major sources of imports (be it imposition of sanctions by the US against Iran or an attack on oil installations in Saudi Arabia) creates major ripples that have the potential to destabilise the country’s economy. The problem...
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Strategic partnerships for oil security
Despite loud talk for decades by successive governments for increasing domestic production of oil and gas to make India self-sufficient in energy, we are producing less than 20% of our requirement – balance over 80% continues to be imported. This heightens our vulnerability to a point whereby a slight disruption in any of major source of our imports [be it imposition of sanctions by USA against Iran or attack on oil installations in Saudi Arabia] creates ripples and causes a major destabilizing effect on the Indian economy. The problem is not with lack of resources [India has 26 Sedimentary Basins covering an area of 3.14 million sq. km.] but lack of a conducive policy environment besides cumbersome regulatory processes which...
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Promote self-sufficiency
The big bang reforms proposed by the Government for the oil and gas sector are laudable but without a stable and predictable policy environment in place, they can’t make much headway The Union Government is considering far-reaching reforms in the gas sector. These include the setting up of a local gas trading platform to facilitate price discovery, stripping the power sector off its priority status by withdrawing priority allocation of natural gas and hiving off the transportation unit of the Gas Authority of India Limited (GAIL), a public sector undertaking (PSU) which currently holds an overwhelming 75 per cent share of the gas transmission network. The stated objective of these reforms is to enable energy firms to invest in exploration and...
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Gas business – what prompts RIL-BP take a re-look?
One-and-a-half decade ago, Reliance Industries Limited [RIL] had created history by announcing the biggest ever gas discovery in Krishna Godavari [KG] basin off the Andhra Pradesh coast with an estimated in-place reserve of 12 trillion cubic feet [tcf]. It started producing from its most prolific bloc KG-DWN-98/3 in 2009 with a promise to deliver 80 million standard cubic meter per day [mmscmd]. After reaching 69 mmscmd in March 2010, production started declining and the trend never got reversed. Currently, it produces only 7 mmscmd which is not even 1/10th of the promised quantity. The precipitous decline in production has remained shrouded in mystery even as the operator is entangled in four arbitration cases with Union Government over various aspects of...
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Gas fiasco – India’s energy security compromised
In its report submitted in November, 2015, De-Golyer and MacNaughthon [D&M] – a consultant appointed by Union government [following dispute between Oil and Natural Gas Corporation’s [ONGC] and Reliance Industries Limited [RIL] over alleged migration of gas from former’s G4PML and D1/E1 discoveries in KG-DWN-98/2 to latter’s D1 and D3 fields in KG-DWN-98/3 off Andhra coast [better known as KG-D6]] – estimated that 0.4 trillion cubic feet [tcf] of gas had migrated from ONGC ‘idle fields’ to RIL. Following this, the government set up a committee under justice A P Shah in December, 2015 to examine the matter and recommend measures to be taken against RIL for “the unjust benefit” it received from the migration of gas taking in to...
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Is India running out of gas?
The news of gas supply from the high profile Reliance Industries Limited (RIL) operated KG-DWN-98/3 field off Andhra coast (better known as KG-D6) drying up by 2020 has come as a shocker for energy deficient India that imports 80% of its oil and nearly 40% of its gas requirements for running fertilizers, power plants, households etc and is aspiring to move rapidly towards building indigenous production capability. Prior to 2000, domestic gas supplies were coming primarily from major gas finds in the Bombay High and South Bassein area in west offshore discovered in late 70s with total production of around 75 million standard cubic meter [mmscmd]. A second bout of major discoveries came around the turn of present century. This...
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