Dr. M. Veerappa Moily, Union Minister for
Petroleum & Natural Gas, addressed the National Editors’ Conference here
today. The two day
Conference was organized by the Press Information Bureau on March
23-24, 2013. Following is the text of the speech of Petroleum Minister :
“Friends from the Media, my
colleague in the Ministry, Smt. Lakshmi
Panabaka, Secretary, Shri Vivek Rae and other senior officials. A background note on
the key initiatives and achievements in the petroleum and natural gas sector
has been circulated for your perusal.
Global Energy Scenario and position
of India
As you all are aware, the
world economy is not yet recovered fully from 2008 slump and the EURO Zone
challenges still continue. The demand for energy and more so hydrocarbons has
nevertheless been increasing steadily. The
Shale gas exploration and production in USA has had its impact on global
availability of energy sources.
The Indian economy is at a
critical juncture.
Indigenous Exploration &
Production Activities
As you will agree with me,
increased domestic production of both oil and gas will go a long way in securing
our nation’s energy supplies. For our nation, this is particularly important
given that last financial year we imported crude oil for more than Rs 6.70 lakh crores.
What this means is that we have transferred significant amount of our nation’s
wealth to oil exporting countries.
According to the Twelfth
Five Year Plan, even though domestic production of energy resources is
projected to increase during the plan period, import dependence will continue
at a high level. The main area of import will be crude oil, where nearly 80 per
cent of the demand will have to be met through imports by the end of the
Twelfth Plan period.
Our government will make
every effort to reduce our nation’s dependence on imported oil and work towards
securing Energy Independence for India.
Let me now briefly reflect
how, in the current context, our government is trying to enhance domestic
hydrocarbon production.
Recently, Ministry of
Petroleum & Natural Gas has allowed exploration in mining lease areas, even
after the completion of exploration period. This clarity & policy direction
will attract significant investments in the Indian E&P sector and result in
higher domestic production of hydrocarbons. This is expected to add substantial volume of
oil and gas production in the existing Mining Lease areas.
I have rolled out New
Vision and set ambitious targets that
aims to reduce our crude oil imports by
50 per cent by 2020; 75 per cent by 2025 and eventually achieve self-sufficiency
and Energy Independence for India by
2030.
Moving towards
self-sufficiency goal will be a very significant step in the history of our
nation. Over the years, our nation’s dependence on oil imports has only
increased. Numerous forecasts also portend that over the next many years, our
dependence on imported oil will increase further. Given all the forecasts, we
are taking every possible initiative to work towards our goal of attaining
self-sufficiency in petroleum.
China has seen a doubling
of gas production in the last six years (2005-2011). The US has seen a tenfold
increase in shale gas production over the last six years. Thus, like China and
US, we too can change our energy landscape in short span.
Is this achievable? Yes it
is - so far only 73 billion barrels of oil and oil equivalent gas could be
established through exploration, out of 205 billion barrels of prognosticated
hydrocarbon resources. Thus, about 133 billion barrels of prognosticated
resources remain to be unlocked through exploration. As you will appreciate, this
will be possible only by speedy implementation of new exploration programmes
across the country.
To this end, the Ministry
of Petroleum & Natural Gas recently constituted a Committee, under the
Chairmanship of Dr. Vijay Kelkar, to prepare a
roadmap for enhancing domestic production of oil & gas and sustainable
reduction in import dependency by 2030. In addition, the committee will also
examine:
1.
Institutional mechanism for
appraisal of the Indian sedimentary basins to the extent of 75 per cent by 2015
and 100 per cent by 2025
2.
Utilization of Oil Industry
Development Board cess and other innovative resource mobilization approaches
for appraising the unexplored/partly explored acreages
3.
Development and promotion
of indigenous service industry in E&P sector
4.
Review of institutional
mechanism to acquire acreages abroad for exploration and production as well as
pursuing diplomatic and political initiatives for import of gas from
neighbouring and other countries with emphasis on transnational
gas pipelines
5.
Steps to be taken for
ensuring adequacy of finances for R & D required for building knowledge
infrastructure in E & P activities
6.
Steps to be taken for
development of gas transportation infrastructure for establishing countrywide
marketplace
The Committee will submit
its report in six months.
Even as we are trying to
enhance domestic production through numerous policy measures, we are working to
create enabling and conducive environment to promote investments, by making
fiscal terms that are simple to administer.
Towards this direction,
last year, under the direction of Hon’ble Prime
Minister of India, a committee was constituted under the Chairmanship of Dr. C Rangarajan to look into the mechanism of Production Sharing
Contracts.
The Committee Report is
under active consideration and very soon the government will work towards
implementing the recommendations. This will improve the overall governance
mechanism of the upstream oil & gas industry and will act as a confidence
building measure to attract the much needed risk capital and newer
technologies.
Way back in 1999, GOI
adopted NELP and we have successfully held 9 bid rounds. The NELP regime has
increased the E&P activities in the nation. Prior to adoption of the NELP,
only 11 per cent of Indian sedimentary basins were under exploration. Since the
operationalization of the NELP in 1999, the
government has awarded 47.3 per cent of Indian sedimentary basin area for
exploration. Similarly, 100% Foreign Direct Investment (FDI) has been permitted
in exploration and production of oil and gas. All these policy measures have
resulted in significant investments in the E&P sector.
The domestic Crude oil
production is expected to reach 42.31 MMT during 2012-13, which would be 11.08%
higher than previous year. The increase in production is mainly on account of
higher crude oil production from Barmer fields,
Rajasthan where current oil production is 1,70,000
bbl/day. The production of natural gas during 2012-13 is expected to be 117.8
MMSCMD which is about 9% lower than the previous year mainly due to lower
production from KG D6 deepwater block.
I may mention that during
visit of the Prime Minister of UK on 01-02-2013, BP Group and RIL announced
combined investments in excess of US $5 billion for the development of KG D6
block over the next 3-5 years.
Co-Existence of National and Energy Security
Operations
As you all are aware, that
there were numerous oil & gas blocks where exploration and development
activities were not permitted due to restrictions from the MoD.
Ministry of Petroleum &
Natural Gas ensured that the very first meeting of the Cabinet Committee on
Investments (CCI) – a committee to fast-track large, delayed projects –
consider oil & gas projects. We have had series of meetings between the
Ministry and the MoD, and we are very close to
resolution based on the principle of co- existence of both National and Energy
Security requirements. In fact the cabinet committee has already given
clearance for five out 7 exploration blocks in the No Go area. Due to these
clearances, the investment already made to the extent of $ 10.71 Billion will
be put to use and further investment to the extent of $ 0.6 billion is
envisaged in the next few years. Further, after the discovery in these blocks
much higher investment is likely to be made. Another 31 Blocks are also being
considered for approval very soon.
Clearance from the CCI will
enable these blocks to conduct exploration and development activities and
thereby further enhance our attempts to enhance domestic crude oil
production.
It is well accepted
globally that natural gas is cheaper, cleaner and in abundance. Thus, GOI will
make all efforts to develop our nation as a gas-based economy. This will help
to reduce our overall import bill and also help to reduce oil marketing
companies’ financial burden given the substitution effect.
Currently, natural gas share
in our nation’s primary energy basket is significantly below the world average.
We shall make all efforts to augment our domestic natural gas supplies.
There are examples to show
that how through extensive development of pipeline infrastructure, LNG regasification terminals, a state
can have a gas-based development model and as a result increase the share of
natural gas in the primary energy basket.
Ushering Shale Gas Revolution
Much like the United States
of America, Shale Gas can emerge as an important new source of energy for our
nation. India has several shale formations which seem to hold shale gas. The
shale gas formations are spread over several sedimentary basins such as Cambay, Gondwana, Krishna-Godawari on-land, and Cauvery. To
explore and exploit the shale formations, the DGH has initiated steps. It will
identify prospective areas for shale gas exploration. Very soon, we will
finalize the Shale Gas policy, which will provide necessary impetus to the
exploration activities and eventually pave way for increased domestic supplies
of natural gas.
Coal Bed Methane
There are
significant prospects for exploration of CBM as India is having the fourth
largest proven coal reserves in the world. We are also pursuing gas production
from the CBM Blocks. Under the CBM policy, 33 exploration blocks have been
awarded. The estimated CBM resources in the country are about 92 trillion cubic
feet (TCF), out of which less than 10 percent has so far been established.
Commercial production of CBM in India has now become a reality with current CBM
gas production of about 0.30 MMSCMD. A revised CBM Policy is under active
consideration of the Government to enable expeditious commencement of
production in case of captive blocks.
Natural Gas Infrastructure
The demand for
natural gas has been increasing exponentially and estimated to cross 400 MMSCMD
by the end of the 12th Five year plan. In order to cater to the
country’s growing gas demand, a provision has been made to increase LNG import
facilities.
Capacity of Dahej is expected to reach 12.5 MMTPA by 2013 and 15 MMTPA
by 2015-16 after expansion. The capacity of HLPL Hazira
is also likely to be expanded to 5 MMTPA in next 3-4 years. Beyond this, PLL
has added another 5 MMTPA terminal at Kochi that is expected to be operationalised in next 2-3 months. Further, a 5 MMTPA capacity LNG Regasification plant at Dabol has
been commissioned in January 2013. A MoU has been
signed on 18th March 2013 between ONGC, BPCL and Japan based Mitsui
& Company Limited to examine the feasibility of setting up a LNG terminal
at New Mangalore port. The work of the consortium is significant in context of
the expected availability of Mozambique gas to the country.
The total Gas
pipeline network in the country has increased from 6837 km in 2004 to around
15,400 km with commissioning of the Dabol-Bangalore
pipeline in January 2013.
We are also
working on a phased implementation of City Gas Distribution network through
Petroleum & Natural Gas Regulatory Board (PNGRB). PNGRB is a regulatory
body set-up under PNGRB Act, 2006 to authorize and monitor the development of
pipeline infrastructure and CGD network in the country. The Board is enabling
network development in several Geographical Area covering more than 300 cities
/ towns in various States. This is done through Expressions of Interest (EOI)
submitted to the Board and on suo-moto basis.
Recently, the
Ministry of Petroleum & Natural Gas notified rules on Eligibility conditions
for Registration of Liquefied Natural Gas Terminals. This would promote setting up of LNG
Terminals in an environment of equitable access and commercial transparency,
which in turn will foster higher availability of imported LNG for the nation.
National and International Gas
Highways
Similarly, we
are also working towards securing natural gas through cross-country pipelines.
Last month, the Union Cabinet gave its approval for the formation of a Special
Purpose Vehicle (SPV) for the Turkmenistan-Afghanistan-Pakistan-India (TAPI)
Pipeline Project and permitted GAIL India Ltd. to join the SPV. GAIL has agreed
to make an investment up to 25 crores in the proposed
SPV that is TAPI Ltd. The Ministry is actively engaged with ADB and other
participating countries to expedite this project which will lead to supply of
38 MMSCMD of gas to India from 2017-18.
Overseas E&P Activities
India is
engaged in bilateral and multi lateral cooperation with various countries for
oil & gas security. The government is encouraging national oil companies to
aggressively pursue equity oil and gas opportunities overseas. Oil &
Natural Gas Corporation Videsh Limited (OVL) has
produced about 8.753 Million Metric Tonnes (MMT) of oil and equivalent gas
during the year 2011-12 from its assets abroad with estimated 6.865 MMTOE in
2012-13. Recently, the GOI has authorized OVL to acquire Participating Interest
(PI) owned by Hess Corporation’s wholly owned subsidiaries in the upstream and
midstream oil and gas assets in Azerbaijan with an investment of US $ 1001
Million.
Refining capacity
You would
appreciate that Indian refining industry has done exceedingly well in
establishing itself as a major player globally. India is emerging as a refinery
hub. Our refining capacity has witnessed 3.5 times increase from 62 MMTPA in
1998 to 215.07 MMTPA at present. It is projected to increase to over 300 MMTPA
by 2016-17.
Paradip refinery with capacity of 15 MMTPA
is at advanced stage of construction and is likely to be completed by November
2013. Expansion of Kochi Refinery, Kerala from 9.5
MMTPA to 15.5 MMTPA through Integrated Refinery Expansion Project has been
planned with an investment of Rs.20,000 crore. A state of the art 9 MMTPA green-field refinery
along with petrochemical complex is also being set up with an investment of Rs. 37,229 crore at Barmer, Rajasthan, which will accelerate economic
development of the region.
Our refining
capacity is not only sufficient for meeting the domestic demand but also
leaving a substantial surplus for export of petroleum products. Since 2001-02
India has been continuing to be a net exporter of petroleum products which now
constitute the largest merchandise exports. During 2011-12, the country
exported 60 MMT of Petroleum products worth more than 58 billion US
Dollars.
Implementation
of BS-III/IV Fuels
The oil
industry has undertaken the massive task of upgrading quality of auto fuels to Bharat Stage –III and IV grades in the country, with an
investment of over Rs.30,000 crore from their
internally generated resources. Today, we are supplying BS IV quality of fuels
in 30 cities including NCR region (which itself comprise of 17 class I cities)
and BS III fuels in the rest of the country. Introduction of these fuels have
reduced vehicular pollution significantly and improved the ambient air quality.
Efforts are
being made to progressively expand coverage of BS IV fuels to total 65 cities
by 2015. We have recently constituted an Expert Group under the chairmanship of
Shri Soumitra Choudhury, Member, Planning Commission to suggest Auto Fuel
Policy and Vision - 2025.
Energy Conservation
In order to
promote conservation of energy, the Government has decided on 22-11-2012 that
5% mandatory ethanol blending with petrol should be implemented across the
country. The target is set to be
achieved by 30-06-2013. A Gazette notification has been issued on 02-01-2013
directing OMCs to implement the EBP Programme.
Pricing and subsidy issues
The Government
is committed to make available essential fuels, particularly cooking fuels to
the common man at affordable prices. Accordingly, the retail selling price of
Diesel, PDS-Kerosene and Domestic LPG are being modulated to insulate the
common man from the impact of rise in international oil prices and domestic
inflationary condition. The under-recoveries incurred by OMCs
as a result are being subsidized by the Government, with the support of
upstream companies. In order to reduce under-recovery and at the same time
restrict the impact on the consumers, the Government has taken the following
reform measures:
a) Price of Petrol has been made market
determined effective 26.06.2010
b) OMCs have been advised to stagger the
increase of price of Diesel in the range of 40 to 50 paise
per litre per month;
c) OMCs have been authorized to sell diesel
to Bulk Consumers at non-subsidized market determined price; and
d) Supply of subsidized domestic LPG
cylinders has been capped at 9 per consumer per annum.
I do earnestly
hope that these concrete steps would help to contain the fiscal deficit and
make scarce resources available to the priority sectors.
I would also
like to mention that while keeping interests of the common man in mind, we have
not increased the price of PDS Kerosene & Domestic LPG since 25th
June 2011. Subsidized LPG for cooking purposes has been extended to
non-domestic exempted LPG customers.
The OMC are at
present incurring under-recovery at the rate of Rs.
8.64 per litre for Diesel, Rs.
33.43 per litre for Kerosene and Rs.
439 per cylinder for Domestic LPG and their daily under-recovery is Rs 423 crore. Out of the total
projected under recovery of Rs 1,61,343 crore of the Public
Sector Oil Marketing Companies (OMCs) on sale of
sensitive petroleum products during 2012-13, under recovery on sale of diesel
alone accounts for 57 per cent.
Direct Benefit Transfer to LPG
(DBTL):
Direct cash
transfer of subsidy to Domestic LPG and PDS Kerosene consumers will be introduced
in 2013-14. Direct Subsidy Transfer is proposed to be implemented in three
phases. In Phase-I, Direct Subsidy
Transfer will be implemented in 51 districts identified by Planning Commission
where substantial Aadhaar penetration has already
been achieved. In Phase-II, entire 18 states shall be covered where UIDAI is
currently enrolling customers. In Phase-III, the coverage will be for 17 states
where National Population Registry under Home Ministry is conducting enrolment.
LPG Transparency Portal
To empower the
LPG consumer, the Government of India has launched new initiatives, Project “Lakshya”, in the LPG business focusing on greater customer
empowerment, better subsidy administration, enhanced transparency in the
distribution chain; along with a slew of IT-based customer service initiatives.
Recently, the Ministry launched new IT / web enabled initiatives to make
distribution of domestic LPG more customer friendly
and enhance transparency. With the launch of “Transparency portal”, customers
have already been empowered to know their consumption and there also are
provisions to flag anomalies in the distribution of LPG cylinders.
Conclusion
Our Ministry will continue
to strive towards evolving effective policy measures to enhance energy security
to the nation. In this regard, the media has a vital role in informing the
public on the challenges faced by the oil and gas sector and the significance
of the measures taken by the Government to ensure growth of the Oil Sector.”
*****
RCJ-PNG :
Min Speech NEC 24032013