Refining capacity to increase by 10 MMTPA during 2006-07, petroleum products emerge top exporter in 1st quater
OPENING REMARKS OF THE PETROLEUM MINISTER SHRI MURLI DEORA AT EEC-06
Shri Murli Deora, Minister for Petroleum and Natural Gas has informed
that in the
first quarter of 2006-07, in value terms, export of petroleum products has
emerged as the number one item of India’s exports replacing jems and jewellery
from its top position. He added that the refining capacity in the country will increase to
148.97 million matric tonne per annum (MMTPA) at the beginning of next five
year Plan (11th Five Year Plan) from the present capacity of 138 MMTPA. Speaking during the Session on Petroleum
& Natural Gas at Economic Editors Conference-2006, here today, Shri Deora
added that during 2006-07 production is expected from additional 6 MMTPA capacity
at IOC Panipat and 3.23 MMTPA capacity addition in 2 refineries at HPCL at
Vizag and Mumbai. Referring to the
highly successful New Exploration Licensing Policy (NELP) Shri Deora informed
that Oil and Oil equivalent Gas in place-reserved accretion is approximately
510 million metric tonne from 16 discoveries under NELP. Shri Deora also elaborated
Government’s efforts to insulate consumers against highly volatile oil prices
by not raising the petrol and diesel prices by the required levels while government
and Oil PSUs absorbed much of the price increase in case of LPG and Kerosene.
He emphasized that Kerosene price at Rs.9/ litre is perhaps the lowest in
non-oil producing nations.
Moving on to the forthcoming agenda of his Ministry, Shri Deora informed that it includes framing
parameters for a possible, Open Acreage Exploration Policy (OAEP), formulating
a suitable gas pipeline policy, fine tuning delivery mechanism for the fuel
meant for vulnerable sections, abundant availability
of kerosene and LPG, new investments abroad, etc.
The
Minister of State for Petroleum & Natural Gas Shri Dinsha Patel and Petroleum
Secretary Shri M.S. Srinivasan, senior other officials of the Ministry of Petroleum
and Natural Gas and CMDs of Oil PSUs.
Following is the text of the speech delivered by Shri Murli Deora, Minister
for Petroleum and Natural Gas: -
“This is
my first opportunity as the Petroleum Minister to address the Economic Editors’
Conference. I have been meeting with members of the media from time to time.
Ministry has already circulated a background note on the petroleum and gas
sector. Today, I would like to mention some of the recent policy decisions
of the Ministry and its future plans to seek your observations and suggestions. We will be happy to clarify on any further
issues that may agitate your mind.
Ministry
of Petroleum & Natural Gas is committed to meeting the National Common
Minimum Programme objectives of providing a strong and efficient public sector,
enhancing energy security, implementing economic reforms with a human face,
ensuring equitable burden sharing, and coping with volatile international
oil prices to ensure that this does not become a
roadblock for the agenda of growth.
Let me begin
with the downstream activities. With 138 MMTPA refining capacity, we are now
self sufficient in making liquid petroleum products available to the consumers.
In the first quarter of 2006-07, in value terms, export of petroleum products
has emerged as the number one item of India’s export replacing jems and jewellery
from its top position.
The sector
is continuously growing, contributing to Gross Domestic Product (GDP) and
employment. In 2006-2007, we expect
production in the additional 6 MMTPA capacity at IOC Panipat refinery and
3.23 MMTPA capacity addition in the two Hindustan Petroleum refineries at
Vizag and Mumbai. We expect that at the beginning of the Eleventh Five year
Plan, which is just a few months away, refining capacity could even become
148.97 MMTPA, in which the contribution of the public sector refineries would
be 105.47 MMTPA, that is, about 70%. In
the Eleventh Plan, there is a target of adding about 86 MMTPA capacity in
the country by 2011-12. The total refining capacity would then become 234.96
MMTPA.
With all
these additions in capacity for refining, the core issue of locating raw material
remains. India is 28% self sufficient
as of now. Import dependency for crude
oil will go up steadily. For meeting energy security, as a strategy, India
needs to aggressively look for acreages abroad, as well as gear up exploration
activities in India.
An
essential component of energy security is the efficacy of the liberal policy
adopted for inviting private sector players in the oil and natural gas sector.
NELP provides that level playing field for all players in the upstream sector.
Under New
Exploration Licensing Policy (NELP) introduced in 1999, already 19 discoveries
have been made. As a result of sustained exploration efforts, oil and gas have been struck
in Rajasthan on land, Krishna Godavari deep water and offshore block in Bay of Bengal. In
the first five rounds of NELP, expected investment is of the order of US $
5 Billion. Oil and Oil-Equivalent
Gas in place reserve accretion under NELP is approximately 510 million metric
tonnes from 16 discoveries. In the context of high
oil prices and volatility in international oil markets, these discoveries
of oil and gas are contributing to more indigenous production, and are enhancing
our self sufficiency.
The Sixth
Round of NELP was launched on 23 February 2006 by offering 55 exploration
blocks covering an area of 3.52 lakh square KM. A total of 66 companies
including 35 foreign companies and 31 Indian companies have bid either on their
own or as consortia for 52 blocks, as three deepwater blocks did not receive
any bids. The bids are being evaluated at present,
and I expect that the contracts with the successful bidders will be signed by January, 2007.
Coal bed methane (CBM) has emerged as another
alternative viable source of gas. In the first and second rounds of
CBM Policy, 16 exploration blocks were awarded to NOC and private companies
by the Ministry of Petroleum & Natural Gas. The exploratory efforts carried
out by the operators have resulted in establishment of 6 trillion cubic feet
(TCF) of CBM gas in 4 CBM Blocks. Production from these blocks is expected
in 2007-2008. Under the third round,
in 2006, 10 blocks were offered in six States. The bids have been already
awarded.
We have recently further empowered the Director
General Hydrocarbons (DGH), so that it can effectively oversee ever increasing
exploration and production activities in India with more areas coming under
exploration with successive rounds of NELP and CBM.
Along with
intensifying exploration efforts in India, the Indian Oil Companies are aggressively
following a policy of gaining global properties. ONGC Videsh Limited (OVL)
today has presence in 15 countries, including in Russia, Sudan, Colombia and
Brazil. OVL has a target to acquire
20 MMTPA of oil and oil equivalent gas production by 2020 but efforts are
being made to achieve it even earlier. OVL produced about 6.62 Million Metric
Tonnes (MMT) of oil and equivalent gas during the year 2005-06 from its assets
abroad in Sudan, Vietnam and Russia. OIL-IOC consortia have acquired blocks in Libya and have signed
farm-in agreements for share in blocks in Gabon and Nigeria. GAIL has acquired
interests in an offshore block in Myanmar.
Natural
gas is fast emerging as the clean fuel of choice. Use of natural gas for the
automotive sector has gained importance for reducing chronic vehicular pollution
in big cities. Today there is city gas distribution infrastructure in position
in 10 cities of India including Delhi and Mumbai. The Ministry to currently drawing up a comprehensive policy to encourage investment in building
infrastructure to provide Piped Natural Gas to 1 crore urban households in
cities and towns within the next three years.
An important and sensitive issue is
the issue of volatility in international petroleum prices and the extent
to which we can insulate the Indian economy from such volatility. As stated in the National Common Minimum Programme, we are
duty bound to protect the vulnerable sections of the society and the common
man from the international prices volatility.
Simultaneously, we have to ensure that our public sector companies
do not become financially unviable therefore, we have adopted a policy of
an equitable burden sharing between Government, upstream oil companies, oil
marketing companies and the consumers.
In recognition
that the petroleum sector accounts for both imports and exports, as recommended
by the Rangarajan Committee, our Government has now adopted application of
‘trade parity’ instead of import parity for pricing of petrol & diesel.
Last year the total under recovery on the 4 petroleum products namely
petrol, diesel, kerosene and LPG was Rs. 39,594 crores.
The largest component in this was the under recovery in kerosene of
Rs. 14,384 crores followed by that on diesel of Rs. 12,284 crores and in LPG
of Rs. 10,266 crores. This year in
June the expected under reovery is Rs. 73,512 crores with diesel amounting
for Rs. 37,940 crores and kerosene amounting for Rs. 19,403 crores.
In order to keep a check on inflation, the domestic prices of petroleum
products like petrol and diesel have not been raised to their international
levels. 84% of the additional burden has been borne by the Government and
only marginal burden has been passed on to the consumers. For kerosene and
LPG, which are common man’s household fuel, the Government and the oil companies
between them, are absorbing the burden of the
much higher international price. The PDS Kerosene which is being supplied
at Rs. 9/- per litre is perhaps one of the lowest prices in any non-oil producing
nation.
With so much difference in price of fuel sold
below their economic price for benefit of the common man, possibility of adulteration
of the costlier fuel by the cheaper fuel is a serious area of concern. The
coordinated and concerted drive against adulteration has three components:
(a)
Public awareness - in
which you all can play an important role.
(b)
Use of new technology
like IT, Global Positioning System (GPS), the recently introduced chemical
marker, smart card etc.
(c)
Strict enforcement measures
for which we have actively solicited state governments intervention.
Third party certification and NGO involvement is also being emphasized.
Ministry
is anxious to provide the right signals for promotion of alternative sources
of energy to supplement liquid fossil fuel. On 20.9.2006, we have notified
that with effect from 1 November 2006, subject to commercial
viability, 5 per cent ethanol blended petrol will be sold countrywide, except the North East, J&K, Lakshadweep and
Andaman & Nicobar Islands. This measure would help the farmers with better
returns and also supplement the availability of petroleum products in the
country. 55 crore litre requirement of ethanol for the present year is likely
to be sourced through the open tender which is under process.
Last
year, the Ministry of Petroleum and Natural Gas had announced a bio-diesel
purchase policy which came into effect from 1.1.2006. The policy prescribes
that the oil marketing companies in the public sector shall purchase bio-diesel
of prescribed BIS specification from registered authorised suppliers through
20 purchase centres at a uniform price, which can be reviewed by the oil companies
every six months with due consideration to market conditions. In accordance
with this policy, present procurement price is Rs 26.50 per litre (from Rs.
25 per litre fixed
last year), delivered at purchase
locations (inclusive of all taxes), and this price will be valid till December
2006.
We are also very serious about arms length
regulation of the petroleum and natural gas sector. A number of relevant rules
under the Petroleum and Natural Gas Regulatory Board Act, 2006 dated 3.4.2006
have been already notified so that the Board, once constituted, may start
its activities as soon as possible. A
Search Committee is working on identifying suitable personnel for the Board
and it is expected to be in position by December 2006.
After assuming the
office, I have had meetings with my counterparts from Pakistan, Iran, Russia,
Qatar, Saudi Arabia, US, Venezuela, Japan and Norway. At the Shanghai Cooperation
Organization Meeting at Shanghai and the 2nd Summit of the Conference
on Interaction and Confidence Building Measures in Asia held in Almaty during
June 2006, I got the opportunity to have detailed discussions with the Iranian
President when I emphasized India’s commitment to source natural gas both
as LNG as already agreed and through the India-Pakistan-Iran Gas Pipeline.
I have just returned after attending the Russian Energy Dialogue and
met with Mr. Khristenko where I reiterated our desire to actively participate
in the Russian upstream projects and in particular in Sakhalin – III.
I have invited the Russian participation in the Indian downstream activities
through joint ventures with Indian companies.
The Venezuelan, Iraqi and Qatari Oil Ministers are visiting India in
this month which will provide us with a good opportunity to further our growing
oil relations.
The forthcoming agenda of Ministry inter alia is :
·
To formulate a suitable gas pipeline policy.
·
Frame parameters for a possible open acreage exploration
policy.
·
Fine-tune delivery mechanism for the fuel meant for the
vulnerable sections of society so that there is minimum leakage.
·
Ensuring abundant availability of kerosene and LPG.
·
Technological upgradation in our PSUs.
·
New investments abroad.
·
Ensuring transparency and good governance.”
RCJ/UB
(Release ID :21833)