To raise India’s oil & gas production, govt looks to private sector for investment, competition

• In spite of the rising share of renewables, oil and gas will continue to play a significant role in India for at least 20-30 years, said Additional Secretary (Exploration) Amar Nath
• We would be happy to see more players emerging from amongst potential investors and competing with a big player like ONGC, said Petroleum Secretary Tarun Kapoor

New Delhi: Placing a lot of policy thrust and urgency on increasing India's domestic oil and natural gas production, the government is seeking private investment and more competition for state-run behemoths like Oil & Natural Gas Corporation (ONGC) and Oil India Ltd (OIL). The rhetoric that emerged out of the investors' meet for potential investors of Discovered Small Fields (DSF) bid round-3 on Friday was that the government wants more small, big, domestic and international players to step into the exploration and production sector by bidding for fields on offer under various regimes or partner with E&P PSUs.

'Oil & gas will be relevant for next 2-3 decades'

Additional Secretary (Exploration), Ministry of Petroleum and Natural Gas, Amar Nath, sought private investment for the sector, saying that despite the growing share of renewables, oil and gas will be relevant for India for the next two-three decades. "Energy landscape in India is going to be more vibrant in coming years as our energy demands are going to increase. India is one of the few countries where energy demand will increase and fundamental drivers of this increase will be per capita consumption of energy, which is just 1/3rd of the world average. Our population is increasing, urbanisation is increasing, industries are thriving and becoming more vibrant. All these need energy," said Nath.

"The energy landscape, which is going to evolve, will have oil and gas in a dominant role. In spite of the rising share of renewables, oil and gas will continue to play a significant role in India for at least 20-30 years. It is with this intention that we are continuously focusing on making policies that are more conducive to investment," the Additional Secretary added.

'Want more players to emerge, consolidate & compete with ONGC'

Interacting with investors, Petroleum Secretary Tarun Kapoor urged the private sector to take part in the bidding process and make an entry into the E&P sector in India in a big way. "Private sector needs to come in a big way into India. Lots of acreages, which could offer a lot of potential, are still unexplored. We would be happy to see more players emerging from amongst potential investors and competing with a big player like ONGC. We want small and large, domestic and international players to come in and also partner with state-run companies in new areas," said Kapoor.

With a view to increase India's domestic production, the government has drawn up a three-year plan targets have been conveyed to all companies and developers, said the Petroleum Secretary. "We have to work together to ensure that those targets are met," he added.

Govt cutting red-tape to promote ease of doing business

Nath said that the government is focussed on improving ease of doing business and is reviewing processes in order to make them conducive for investors. "We are focusing on ease of doing business. Wherever we feel a particular process is not serving any purpose, we are reviewing them and we are making changes that are conducive to investors," he said. 

"We are importing almost 85 percent of our crude oil requirements. And it is this context which spurs us to increase domestic crude oil production," Nath added.

Background

According to a data analysis by PSU Watch, India's cumulative crude oil production has been on a steady downward trajectory and has registered a decline of 20 percent over the last decade. Data shows a consistent decline in crude oil output between FY12 and FY21. While cumulative crude oil production stood at 38,089.689 TMT in FY12, in FY21 it went down to 30,491.77 TMT. India's crude oil production declined 3.42 percent year-on-year in Q1 of FY22, according to the most recently released official data. The decline in crude oil production has been a matter of concern for the government as it has increased the country's reliance on imports. In order to increase domestic production, the government has also prepared a revamp plan for ONGC, which accounts for majority of India's crude oil and gas output. Under the plan, the Centre has asked ONGC to monetise or disinvest oil and gas fields and seek partnership with domestic and foreign players to bring idle, discovered fields to production. 

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