RAM NAIK OUTLINES DEVELOPMENTS IN THE INDIAN PETROLEUM
SECTOR
Shri Ram Naik, Minister of Petroleum & Natural
Gas, while addressing a Press Conference at Rio de Janeiro, Brazil
on the occasion of the 17th World Petroleum Congress,
highlighted the recent developments and investment opportunities
in the Indian Petroleum Industry. India with a population of over
1 billion is one of the largest consumers of petroleum products.
The consumption of crude oil was about 110 million metric tonne
(MMT) (800 million barrels) in the year 2001-2002. The demand
is growing at a rate of 5% per year. India imports about 70% of
her crude requirements, the Minister said.
In order to foster competition, increase production
and improve self-reliance, following steps have been taken:
Dismantling of administered price mechanism
(APM)
The price of controlled petroleum products i.e.
petrol, diesel, LPG, SKO and aviation turbine fuel (ATF) was fixed
by Government under the administered price mechanism (APM) which
was in existence since 1975. In order to boost competition so
as to benefit the consumers, the Government has dismantled the
administered price mechanism from 1.4.2002. Now, the price of
controlled petroleum products would reflect the changes in international
price of the commodities. However, a fixed amount of subsidy would
continue on LPG for domestic use and SKO for public distribution
system, which would be phased out over a period of three to five
years. The present subsidy is about 35% on LPG and 40% on Kerosene.
With the dismantling of APM, the Government has
allowed new parties which have invested or propose to invest USD
400 Million over a period of ten years in setting up infrastructure
projects in the hydrocarbon sector to market transportation fuels
i.e. petrol, diesel and aviation turbine fuel. The Government
has already granted marketing rights to two private companies
-- Reliance Industries and Essar Oil in addition to two Public
Sector Undertakings – Oil & Natural Gas Corporation (ONGC)
and Numaligarh Refinery Limited (NRL) in May, 2002. These companies
have been allowed to set up 8,659 retail outlets. This marks a
40% increase over the existing retail outlet strength of 18,848
operated by the existing four state oil marketing companies i.e.
Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation
Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL) and
IBP Company Limited.
Efforts in exploration
The demand for petroleum products is increasing
at an annual rate of 5% while there have been no major discoveries
of crude oil after the giant Mumbai High fields in the 1970’s.
In an effort to promote exploration for oil and gas the government
has formulated a New Exploration Licensing Policy (NELP). Under
the NELP, so far 47 blocks for exploration of oil and gas have
been awarded under two rounds since the year 2000. In the third
round of NELP bids have been received on 28.8.2002 for another
23 blocks. Efforts are on to explore the deepwater basins for
the first time. 24 blocks have been awarded for deepwater exploration.
About 30% of the sedimentary area of the country is now covered
by exploration under NELP. Geological Data indicates very strongly
the presence of large areas of oil and gas.
Acquisition of Equity Oil Abroad
Apart from exploration of oil and gas within
the country, efforts are on to enhance oil security by acquiring
equity oil abroad. ONGC Videsh Limited (OL) has acquired 20% stake
in the Sakhalin oil field in Russia with an investment of USD
1.6 Billion. The country will receive about 4 to 6 million tonnes
of oil as its share in the Sakhalin field from the year 2005 onwards.
The Government has recently approved acquisition of 25% stake
in the Greater Nile Oil Project in Sudan. This is a producing
field and the country will receive 3 million tonnes of oil per
year as soon as the final agreement is reached. OVL has also got
a 45% stake in a gas field in Vietnam. Natural Gas from the project
is likely to be available from the end of this year. OVL is actively
scouting for opportunities in other parts of the world including
Kazakhstan, Venezuela, Iran and Egypt.
Sustainable Development and the Hydrocarbon
Industry in India
Liquefied Petroleum Gas
To protect the environment and promote sustainable
development, the Government is expanding the reach of Liquefied
Petroleum Gas (LPG). There are a total of 63.5 million LPG consumers
in the country at present covering about 30% of the population.
Of these 32 million connections have been added since 1998. It
is the endeavour of the Government to make kitchens smoke-free
and protect the environment by reducing the use of firewood. Smaller
LPG cylinders with a capacity of 5 kg have been specially introduced
for remote and far flung rural markets and to make LPG affordable
to the poor.
Ethanol Blended Fuel
The Government has also mandated the use of ethanol
in petrol in 13 states as ethanol from sugarcane is a renewable
source of energy and its use will enhance the income of sugarcane
farmers. Government has taken a decision to blend 5% ethanol in
petrol throughout the country. In the first phase, this programme
will be taken up in 9 States, from 1.1.2003 when 5% blending with
ethanol will become compulsory. This program would require 320
million litres of ethanol annually in the first phase.
At present the Bureau of Indian Standards (BIS)
permits 5% blending in petrol. However, blending up to 10% can
be done without any modification in the engines and efforts are
on to get the BIS standards modified to allow 10% blending in
petrol. Research is also continuing to study the feasibility of
blending of ethanol in High Speed Diesel (HSD).
An MOU has been signed between the Governments
of Brazil and India for cooperation in this field as Brazil is
the world leader and has been practising this technology for over
70 years.
Coal Bed Methane
The Government has also embarked on a program
for exploiting Coal Bed Methane (CBM), which is a new and environment-friendly
source of energy by tapping natural gas trapped in coal seams,
and which would lead to safer coal mining. For commercial exploitation
of CBM, 8 blocks have been awarded in the last one year.
Production of Food Grade hexane
Hindustan Petroleum Corporation Ltd., has successfully
developed and commercialised environment-friendly extraction technology
for producing food grade Hexane meeting WHO standards using NMP
(N-Methyl Pyrrolidone). This technology has won the Council for
Scientific & Industrial Research (CSIR) technology award in
India. This technology has also been selected as one of the 30
best submissions for the WPC Excellence Awards.
