There have been many developments in the oil & gas sector in the last two years since the new government took over. Dharmendra Pradhan, Union oil & gas minister, spoke about the various flagship schemes of his ministry, plans, acquisitions and overall industry scenario. Excerpts from the interview:
What is the update on Pradhan Mantri Ujwala Yojana under which you are planning to provide gas connections to close to five crore BPL families?
The entire process will need terminals, bottling plants. We are managing each element while facilitating LPG availability with domestic refineries and its imports. We import 40-45% of LPG needed and will have to continue doing so with rise in our consumer base. We are making necessary provisions for LPG delivery to the common public and BPL category consumers. This has entailed visualising every aspect of the process for the past two years during which we have broken down the project into manageable halves and delegated tasks.
The crude oil prices have risen to $50 per barrel. Will the marketing margins of oil companies rise with the prices?
We are not very concerned about increasing marketing margins. The companies operate with a business oriented approach and are national enterprises that work responsibly so there should be no losses. Our primary concern is the proper delivery of gas to consumers, at the right prices, in an uninterrupted manner.
Will the formula for subsidy sharing remain the same going forward?
Our biggest product diesel has been handed over to the market forces. We have saved a great deal in LPG subsidy with 1.5 crore people surrendering their subsidies, we have weeded out 3.5 lakh ghost consumers and created kerosene-free states like Haryana. Madhya Pradesh is cooperating, so are Maharashtra and several other states to ensure kerosene is availed by the right people. We plan to stop the black-marketing of kerosene and will stop it getting into the hands of the wrong people with a targeted subsidy formula. We intend to devise more such innovative plans to curb use of subsidies.
In the Budget oil exploration companies got relief with the ad valorem cess being cut to 20%. With the oil price rising, they will again have to pay close to $9 per barrel. Do you think the cess should be reduced to 10%?
Yes, I agree. Ad valorem cess should be reduced from 20% to 10% and we will make this recommendation.
The government oil companies are not able to compete with private firms on gross refining margins...
Not all refineries can process different types of oil alone without compromising their capacity. Nevertheless, I assure you that most PSU sector refineries’ GRMs are promising.
The bidding for 67 small oil & gas fields entails a production sharing model as opposed to revenue sharing. What difference would this make?
These fields are discovered ones so they don’t really pose a risk. The rest are based on a PSC model, the profit sharing model has been on-going for many decades and is a tested model.
We received many suggestions, and after extensive deliberation we opted for the least opposed one that also stimulated business growth.
KG Basin to attract over Rs. 1 lakh crore investment, says Dharmendra Pradhan
Union Petroleum Minister Dharmendra Pradhan has said the KG Basin is likely to see investment of over Rs. 1 lakh crore over the next five-seven years as ONGC, Reliance Industries Limited and GSPC execute their plans and expand their operations.
Addressing a media conference to outline some of the achievements during the two-year Narendra Modi led Government, he said, “If the plans of ONGC, RIL and GSPC and others go through as proposed, KG Basin will once again be a game changer for India with its oil and gas reserves.”
He said though the exploration and extraction of oil and gas in the KG basin is quite challenging and capital-intensive, it holds immense potential.
The policy changes brought about by the government earlier this year will help tap the huge reserves in the Basin.
In addition, there is huge potential for gas hydrates from these fields and work is on to explore various options, he said.
Referring to the focus on Telangana, which last week completed its second anniversary of the State formation, he said that the Centre has planned a number of projects for the State.
These include the Mallavaram to Ramgundam gas pipeline, which will help revive the sick Fertiliser Corporation of India (FCI) unit with the gas from the KG Basin.
“There is another pipeline now under execution from Paradip to Hyderabad from the Indian Oil Corporation refinery. This will help better manage the supply chain for various petroleum products,” he said.
Referring to the City Gas Distribution networks, he said, “The Bhagyanagar Gas will be able to provide connectivity to over one lakh users over the next two years and this will then be expanded to reach out to more consumers.”
While mentioning about how the Direct Benefit Transfer scheme has brought about a major change in the way subsidies are implemented and transferred to the beneficiaries, Pradhan said his ministry has set an ambitious target of providing five crore LPG connections to below poverty line families over the next three years.
What is the update on Pradhan Mantri Ujwala Yojana under which you are planning to provide gas connections to close to five crore BPL families?
The entire process will need terminals, bottling plants. We are managing each element while facilitating LPG availability with domestic refineries and its imports. We import 40-45% of LPG needed and will have to continue doing so with rise in our consumer base. We are making necessary provisions for LPG delivery to the common public and BPL category consumers. This has entailed visualising every aspect of the process for the past two years during which we have broken down the project into manageable halves and delegated tasks.
The crude oil prices have risen to $50 per barrel. Will the marketing margins of oil companies rise with the prices?
We are not very concerned about increasing marketing margins. The companies operate with a business oriented approach and are national enterprises that work responsibly so there should be no losses. Our primary concern is the proper delivery of gas to consumers, at the right prices, in an uninterrupted manner.
Will the formula for subsidy sharing remain the same going forward?
Our biggest product diesel has been handed over to the market forces. We have saved a great deal in LPG subsidy with 1.5 crore people surrendering their subsidies, we have weeded out 3.5 lakh ghost consumers and created kerosene-free states like Haryana. Madhya Pradesh is cooperating, so are Maharashtra and several other states to ensure kerosene is availed by the right people. We plan to stop the black-marketing of kerosene and will stop it getting into the hands of the wrong people with a targeted subsidy formula. We intend to devise more such innovative plans to curb use of subsidies.
In the Budget oil exploration companies got relief with the ad valorem cess being cut to 20%. With the oil price rising, they will again have to pay close to $9 per barrel. Do you think the cess should be reduced to 10%?
Yes, I agree. Ad valorem cess should be reduced from 20% to 10% and we will make this recommendation.
The government oil companies are not able to compete with private firms on gross refining margins...
Not all refineries can process different types of oil alone without compromising their capacity. Nevertheless, I assure you that most PSU sector refineries’ GRMs are promising.
The bidding for 67 small oil & gas fields entails a production sharing model as opposed to revenue sharing. What difference would this make?
These fields are discovered ones so they don’t really pose a risk. The rest are based on a PSC model, the profit sharing model has been on-going for many decades and is a tested model.
We received many suggestions, and after extensive deliberation we opted for the least opposed one that also stimulated business growth.
KG Basin to attract over Rs. 1 lakh crore investment, says Dharmendra Pradhan
Union Petroleum Minister Dharmendra Pradhan has said the KG Basin is likely to see investment of over Rs. 1 lakh crore over the next five-seven years as ONGC, Reliance Industries Limited and GSPC execute their plans and expand their operations.
Addressing a media conference to outline some of the achievements during the two-year Narendra Modi led Government, he said, “If the plans of ONGC, RIL and GSPC and others go through as proposed, KG Basin will once again be a game changer for India with its oil and gas reserves.”
He said though the exploration and extraction of oil and gas in the KG basin is quite challenging and capital-intensive, it holds immense potential.
The policy changes brought about by the government earlier this year will help tap the huge reserves in the Basin.
In addition, there is huge potential for gas hydrates from these fields and work is on to explore various options, he said.
Referring to the focus on Telangana, which last week completed its second anniversary of the State formation, he said that the Centre has planned a number of projects for the State.
These include the Mallavaram to Ramgundam gas pipeline, which will help revive the sick Fertiliser Corporation of India (FCI) unit with the gas from the KG Basin.
“There is another pipeline now under execution from Paradip to Hyderabad from the Indian Oil Corporation refinery. This will help better manage the supply chain for various petroleum products,” he said.
Referring to the City Gas Distribution networks, he said, “The Bhagyanagar Gas will be able to provide connectivity to over one lakh users over the next two years and this will then be expanded to reach out to more consumers.”
While mentioning about how the Direct Benefit Transfer scheme has brought about a major change in the way subsidies are implemented and transferred to the beneficiaries, Pradhan said his ministry has set an ambitious target of providing five crore LPG connections to below poverty line families over the next three years.
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