New Delhi: Niti Aayog has proposed the setting up of a Special Purpose Vehicle (SPV) by the government and state-run oil PSUs for oil and gas exploration. The think tank has proposed combining foreign expertise with Indian funding to attract international players to the Indian oil and gas exploration and production (E&P) sector, said The Economic Times in a report citing sources familiar with the matter.
Niti Aayog has suggested that the government and state-run oil PSUs assume the financial risks in oil and gas exploration to increase foreign participation in the upstream sector.
In a proposal sent to the Ministry for Petroleum and Natural Gas, Niti Aayog has suggested that the SPV be funded equally by the government and oil and gas PSUs, according to people familiar with the matter. According to the proposal, the SPV would hire a foreign player as an executing agency, who would bring in their expertise but no money.
If the exploration is successful and results in a discovery that can be commercially developed, the executing agency would get a participating interest in the project, Niti Aayog has recommended.
India is desperately looking to enhance domestic production of crude oil and natural gas within the window that is available for the utilisation of fossil fuel-based sources of energy. Foreign entities have been reluctant to commit capital to the E&P sector in India because the risk of stranded investments looks real as global capital shifts away from fossil fuel.
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