Indian energy firms will hold stakes in oil and gas fields in the Middle-East while companies from the Gulf will invest in oil and gas infrastructure, refineries and petrochemicals at home, as commercial ties with the world’s biggest oil-exporting region evolve into a strategic relationship, Oil Minister Dharmendra Pradhan said. He said the Gulf countries are enthusiastic about strengthening ties with India and have stopped levying the ‘Asian Premium’, a controversial practice of charging a higher rate for crude oil sold to Asia, compared with other buyers in more prosperous regions.
“Today we are talking to (Middle East countries) that we don’t just want prices, but on the basis of strategic relationship we should also get equity in exploration and production projects. Their investment if it comes in the oil industry infrastructure, petrochemicals, refinery, downstream, then our country’s consumers and oil companies will develop. There will be more competition. Who will gain? Our consumers,” Pradhan told ET in an interview. “This kind of discussion is going on under the leadership of our prime minister. This is at a very advanced stage in many verticals,” the minister said. He said countries in the Middle East had responded positively to Prime Minister Narendra Modi’s initiatives and given certain assurances.
On the domestic front, Pradhan said initiatives to resolve exploration issues along with steps to promote biofuels will reduce India’s import dependence by 10% compared with earlier projections. He said the country would meet its target of 5% ethanol blending in petrol for the first time since the measure was introduced. “The prime minister has given us the target to reduce import dependency by 10%. First we found it challenging, but now we find it achievable.” He said ONGC and Gujarat State Petroleum Corp were holding commercial talks to use common facilities in the KG Basin, the region where the two companies, apart from Reliance Industries, have discovered gas in challenging fields.
The minister said his advice is that companies should follow the best practices of oil majors, which share infrastructure to cut costs even if they compete with each other in the market. Pradhan said India’s overhaul of its exploration policy had evoked a positive response globally. He said the International Energy Agency’s director general had written to the government appreciating the policy changes. He said global majors look at the oil price situation before investing, and tend to cut expenditure when prices fall, unlike state firms like ONGC and Saudi Aramco, which have not cut capex.
He said the changes in gas price policy for difficult fields will lead to higher production. “These fields will start production in three to four years.” “In challenging fields, ultra-deep water fields, there are three primary stakeholders: ONGC, GSPC and RIL-BP joint venture. All have said publicly that they will increase investment as the price makes it viable. It’s a big statement,” the minister said.
He said the government was keen to create an environment that supports investments instead of creating disputes. “We want to take all stakeholders in confidence. Arbitration is a legal right. Arbitration situation shouldn’t come. We want to undertake reforms to ensure that. We don’t want disputes and arbitration, but we’ve got legacy issues. How to sort these out, we are working towards that.” He said the way to resolve such issues was to undertake reforms.
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