30 Mar, 2013

India Targets Energy Independence by 2030

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Ministry of Petroleum & Natural Gas, 24-March, 2013 – The Minister for Petroleum & Natural Gas Dr. M. Veerappa Moily, speaking at National Editors’ Conference here today, said that his government will work towards securing Energy Independence for India. Stressing need for increasing domestic oil & gas production, he said, “Our government will make every effort to reduce nation’s dependence on imported oil.” This is particularly important given that last financial year we imported crude oil worth about US$ 140 billion, he added.

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Dr. Moily elaborated a number of steps taken to boost domestic exploration and production of hydrocarbons. These include his ministry allowing exploration in Mining Lease (ML) areas even after completion of exploration period to attract significant investments and add substantial value of oil & gas production in ML areas.

The Minister also said that he has rolled out new vision and set ambitious targets to reduce crude oil imports by 50% by 2020, 75% by 2025 and eventually achieve self-sufficiency and Energy Independence for India by 2030. This is possible, he emphasised, as only 73 billon barrels out of 205 billon barrels of prognosticated hydrocarbon resources have been established so far, leaving 133 billion barrels to be unlocked. To speed of implementation of new exploration programmes across the country, Petroleum Ministry 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.

The Minister further said the government is working to create enabling and conducive environment to promote investments, by making fiscal terms that are simple to administer. Towards this direction, recommendations of a committee setup by the Prime Minister under the Chairmanship of Dr. C. Rangarajan, are under consideration of the government.

Dr Moily also informed that 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 in Rajasthan where current oil production is 1,70,00 bbl/day.

He also said that the recently set up Cabinet Committee on Investments (CCI), a committee to fast-track large-delayed projects, has already given clearance for 5 out of 7 exploration blocks in the No Go area. “We have had series of meetings between the Ministry(MoPNG) and the MoD, and we are very close to resolution based on the principle of co- existence of both National and Energy Security requirements’’, he added. 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.

The Minister also called for ushering Shale Gas Revolution. He announced that Shale Gas Policy will soon finalised to give impetus to domestic gas production. 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 and 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. Dr. Moily added that a revised CBM Policy is under active consideration of the Government to enable expeditious commencement of CBM gas production in case of captive blocks. There are significant prospects for exploration of CBM as India is having the fourth largest proven coal reserves in the world.

He also said that in order to cater to the country’s growing gas demand, augmentation of LNG import facilities is underway. This include capacity expansion of PLL’s Dahej Plant to reach 12.5 MMTPA by 2013 and 15 MMTPA by 2015-16, besides its 5 MMTPA terminal at Kochi that is expected to be operationalised in next 2-3 month. Further, a 5 MMTPA capacity LNG Regasification plant at Dabol has been commissioned in January 2013. The capacity of HLPL Hazira is also likely to be expanded to 5 MMTPA in next 3-4 years. Capacity addition are also being planned at Dabol and new plant at Mangalore, the Minister said.

To source natural gas from abroad, Minister informed, the Union Cabinet last month gave its approval for the formation of a Special Purpose Vehicle (SPV) for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline Project and permitted GAIL India Ltd to join the SPV. “His Ministry is actively engaged to expedite TAPI project which will lead to supply of 38 MMSCMD of gas to India from 2017-18.”, Dr Moily added.

He also emphasized that the government is encouraging national oil companies to aggressively pursue equity oil and gas opportunities overseas. Govt recently authorized OVL to acquire Participating Interest (PI) in oil and gas assets in Azerbaijan with an investment of US$ 1001 Million. ONGC Videsh Ltd. (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.

Referring to tremendous progress by Indian refining industry, the Minister said, 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”, Moily said. 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 has been planned with an investment of Rs.20,000 crore. A 9 MMTPA green-field refinery along with petrochemical complex is also being set up at a cost of Rs. 37,229 crore at Barmer, Rajasthan. Since 2001-02 India has been continuing to be a net exporter of petroleum products. Petroleum products constitute the largest merchandise exports with exports of 60 MMT worth more than 58 billion US Dollars in 2011-12.

The Minister also said that 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-Kereosene and Domesic 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 which is estimated to be about Rs 1,61,00 crore in 2012-13, are being subsidized by the Government, with the support of upstream oil & gas companies. “While keeping interests of the common man in mind, we have not increased the price of PDS Kerosene & Domestic LPG since 25th June 2011,” he stressed. The Minister under lined that the health of the Public Sector Oil Marketing Companies (OMCs) need to be protected enabling them to maintain supplies of petroleum products. He also announced that direct benefit transfer to LPG (DBTL) for cash transfer of subsidy to Domestic LPG and PDS Kerosene consumers will be introduced in 2013-14.