Background:
Demand for energy is a direct indicator of economic health, making the growth of oil & gas related infrastructure a key to the India’s growth. India is the 4th largest importer of oil & natural gas in the world, importing around 80% of its crude oil) and around 50% of its natural gas in 2016 – 17.
India is estimated to have proven oil & gas reserves (2P reserves) of 635 Mmt and 54 Tcf respectively. It also has estimated shale gas reserves of 96 Tcf. The upstream oil & gas sector in India still remains dominated by state owned Public Sector Undertakings (PSUs) Oil & Natural Gas Corporation (ONGC) and Oil India Ltd (OIL). Privately owned companies such as Reliance Industries Ltd (RIL) and Cairn India have made significant contributions to the domestic oil and gas production. ONGC Videsh Ltd (OVL) owns participating interests in 38 oil and gas assets in 17 countries around the world.
As a major initiative to attract private investment in the country’s oil and gas sector the New Exploration Licensing Policy (NELP) was launched in 1997 – 98. Under the nine rounds of NELP, 254 E&P blocks were allocated witnessing an investment of around USD 22 billion in the upstream sector.
In March 2016, the Union Cabinet, approved the Hydrocarbon Exploration Licensing Policy (HELP) replacing the NELP regime. HELP introduces features such as uniform licensing for E&P of all forms of hydrocarbons; an open acreage policy for E&P licensing; an easy to administer revenue sharing model; and marketing & pricing freedom for domestically produced crude oil & natural gas.
In September 2015, the Union Cabinet approved the Marginal Field Policy to monetise oil & gas fields which could not be monetised by ONGC and OIL due to isolated locations, small size, prohibitive development costs, technological constraints, unfavourable fiscal regime, etc. In February 2017, 31 contract areas under the Discovered Small Field bid in 2016 were allocated, with the expectation to monetise 40 Mmt of oil and 22 Bcm of natural gas from these fields in next 15 years. In June 2017, the Government decided to set up separate committees to monitor the oil fields of ONGC and OIL as part of its broader plan to make these firms more accountable and boost the output from their aging fields.
In line with India’s commitments at CoP21 in 2015 to reduce carbon emission intensity by 33 – 35% from 2005 levels by 2030, focus has shifted towards increasing the penetration of cleaner natural gas in the Primary Energy Mix (PEM) from a present 6.4% to 15% by 2030.
India’s gas infrastructure must be augmented to support the India’s move towards a more gas-based economy. The Government has envisaged a plan to expand the existing gas pipeline network of 16,000 km by adding another 15,000 km by 2022, and complete the National Gas Grid. There is a push to strengthen the demand for natural gas through the development of consuming markets such as fertiliser, power, transport & industry.
The Urja Ganga Project launched in October 2016 to create an extensive natural gas network in the five economically weaker eastern states of UP, Bihar, Jharkhand, West Bengal and Odisha. This will benefit a population of more than 36.5 lakhs by bringing Piped Natural Gas (PNG). Further, all upcoming smart cities projects will have PNG facilities.
The downstream segment of the value chain is now witnessing increasing private sector involvement. India has 22 operational refineries with an installed refining capacity of 234 Mmtpa. PSU refineries own around 66% of the net refining capacity while the two private refineries, RIL (Jamnagar) and Essar Oil (Vadinar) own the remaining 34% The retail sector in India is dominated by three PSU oil marketing companies with Indian Oil Corporation Ltd (IOCL); Hindustan Petroleum Corporation Ltd (HPCL); and Bharat Petroleum Corporation Ltd (BPCL) enjoying a market share of more than 95% of India’s retail fuel market. As on June 2017, there were 59,595 retail outlets across the country.
In order to ensure that best possible prices are offered to the consumer and to improve transparency in the fuel pricing mechanism; the government has decided to introduce a dynamic pricing mechanism in June 2017. Dynamic pricing is being launched after successful pilots in five cities - Udaipur, Jamshedpur, Puducherry, Chandigarh and Visakhapatnam.
Government Welfare Schemes:
PAHAL Scheme: This was launched in across India on 1 January 2015, allow LPG consumers holding Aadhar Cards to receive LPG subsidy directly in his/her bank accounts. The scheme resulted in savings worth over Rs 50,000 crores, by plugging last mile subsidy receipt gaps and elimination of ghost consumers, by December 2016.
#GiveItUp Campaign: The campaign was aimed at motivating the LPG users who can afford to buy the LPG cylinders at market price to voluntarily surrender their LPG subsidy. The impact started showing when by April 2017, 1 crore households started benefitting from LPG subsidy, opted to buy cylinders at market price.
Pradhan Mantri Ujjwala Yojana (PMUY): The was launched on 1 May 2016 with an objective to make 5 crore LPG connections available to women in Below Poverty Line (BPL) families, with each household being provided a financial assistance of Rs 1600. The upfront payment required for an LPG connection has been waived so as to make the scheme more attractive. As on May 2017, PMUY had benefitted more than 2.17 crore BPL families in 694 districts across the country.
CII’s Work
CII National Committee on Hydrocarbon is a high level CEOs Forum, comprising of industry leaders, senior government officials and sectoral experts, with the mandate to maintain a collaborative relationship between Government and Industry, and steer policy advocacy in this key sector.
Gas Roadmap for India: CII has created the ‘Gas Roadmap for India’ report which serves as a framework document outlining the vision as well as the immediate actions required to achieve a 15+% penetration of natural gas in India’s energy mix.
CII Report on ‘India’s Energy Security and Transnational Gas Pipelines’: The report holds comprehensive recommendations towards identifying the role of transnational gas pipelines that can contribute towards an ultimate transformation to India’s energy basket and to do away with the vulnerabilities related to the continuous supply of imported natural gas.
#Gas4India: The Gas4India campaign is a call to action demanding clean and affordable energy for all. This campaign has been spearheaded by CII, Natural Gas Society (NGS) and Petrofed (now FIPI) with the support of MOPNG to create awareness amongst consumers about the benefits of Natural gas for the environment and the economy.
CEOs Dialogue with Mr Dharmendra Pradhan, Minister of State (I/C) Petroleum and Natural Gas 16 August 2016: The session deliberated the need for developing a detailed sectoral analysis for natural gas encompassing cost comparison with alternative fuels, competitiveness and the business case for gas (including LNG) in power, fertiliser, City Gas Distribution (CGD), transportation and industrial segments.
Roundtable on India – Emerging Investment Destination in New Energy Landscape, 8 November 2016: To promote manufacturing of oil & gas equipment industry in the country, in line with government’s ‘Make in India’ initiative, CII organized this Roundtable at the Abu Dhabi International Petroleum Exhibition and Conference 2017.
Global Energy Dialogue, 30 November 2016: This was organized by CII in collaboration with NITI Aayog and the University of Columbia in New Delhi. The sessions deliberated upon the trends in the international LNG industry and the best practices that India could adopt to make its gas portfolio more efficient. There were discussions on the need to upgrade the gas pipeline infrastructure, regasification of LNG plants and storage terminals along with policy interventions to achieve 15+% contribution of natural gas in India’s PEM.
Background:
Demand for energy is a direct indicator of economic health, making the growth of oil & gas related infrastructure a key to the India’s growth. India is the 4th largest importer of oil & natural gas in the world, importing around 80% of its crude oil) and around 50% of its natural gas in 2016 – 17.
India is estimated to have proven oil & gas reserves (2P reserves) of 635 Mmt and 54 Tcf respectively. It also has estimated shale gas reserves of 96 Tcf. The upstream oil & gas sector in India still remains ...