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Published:Thursday, December 13, 2018 11:20 AM

National Oil & Gas Summit-2018- The Road Ahead

oil and gas

 Background: Oil & gas sector of India is among the major core industry and plays a decisive role in influencing decisions of the government for all other sections of the society. India’s robust economic growth is imperative to its growing energy demand and is the need of the hour having utmost importance. Oil and gas combined share of 35.6% in the energy mix shows the huge importance and dependability of India on hydrocarbons and thereby it is projected to witness a huge growth in consumption of hydrocarbons which on other hand would also make the sector more conductive for investments in upcoming time. Indian Oil and gas sector is undergoing through a major paradigm shift now days fueled by supportive government programs to reduce the dependency on crude oil imports and to transform India into a gas based economy. Rising price of crude oil in international market and depreciating currency value have hit the country’s current account deficit hard. The changing dynamics of international market have resulted in the setting of a new policy framework for the transformation of the energy sector by the government of India which has a major objective to attract investments to accelerate the growth in indigenous production of hydrocarbons in the country.

National Oil & Gas Summit held on 4TH December, 2018 held at New Delhi was focused on the burning issues regarding oil & gas sector of India. Many prominent speakers from the government and industry channeled their views about the present technological, administrative, and administrative scenarios about the oil & gas sector. Problem statements were duly narrated and their viable solutions were also discussed in comprehensive manner which not only provided the current assessment of the sectoral achievements but also thrown light on the way ahead for Indian Oil & Gas sector.

Exploration In India: An upstream perspective on Oil & Gas Prospectively in Today’s business climate:

Indian demand for oil and gas is ever rising owing to growing economy and infrastructural development in the country. India is third largest consumer of oil and petroleum products in the world with proven oil reserves of around 740 MMT (Million Metric Tons). Oil and gas plays an important role in country’s energy fulfillment as it constitutes around 35% share in energy mix which is expected to grow further in upcoming time. The dependency of India on oil and gas resources is projected to remain high in future and it is hard to replace with other unconventional sources of energy as per present consumption trend of petro products. Indian government has planned to reassess its hydrocarbon resources as around 52% areas of the sedimentary basins of Mesozoic age are still un-appraised/unexplored.

Prominent speaker, Mr. Debashish Purkayastha, ED-Head EXCOM of ONGC spoke about the various innovative programs initiated by the government and the environment of growing investments created by them in Indian E&P sector. Newly designed National Seismic Program aims to cover around 48,000 Sq. Km. of area which would be further supplemented through multi-client surveys. This generated data would be used against the committed minimum work program in revenue sharing contracts. Recent inception of NDR (National Data Repository) assists potential investors to make informed decisions and facilitated award of blocks under HELP regime. NDR also provides a unique platform to view, analyze, and purchase the exploration and seismic data for all E&P companies, institutions, and research agencies. Reassessment of the hydrocarbon resources would also help in enhancement of prospectivity potential of existing resources on India and would further help in opening new areas for E&P activities. All other programs such as National Gas Hydrates Program, assessment of shale resources, and CBM policies would further help in unlocking unconventional resources potential of the country in upcoming time as these resources have higher breakeven prices. Pan India IIT program has also been introduced to collaborating industry with academia for development of more innovative solutions for the development of difficult and inaccessible hydrocarbon resources in the country.

 Natural gas Trading Hub: Chief speaker of the event, Mr. Amar Nath, IAS, Joint Secretary, MOPNG presented a brief overview of the current activities going on in petroleum sector of India. He mentioned about various programs introduced by the government which resulted in growth of investments in the E&P sector and also stressed on the need to explore more sedimentary basins for developing hydrocarbon resources. He also expressed the need for quick monetization of recently auctioned oil and gas blocks in DSF 1 (Discovered Small Fields) round 1 under OALP (Open Acreage Licensing Policy) for increasing domestic oil & gas production. Mr. Amar Nath also expressed the intent of the government for developing natural gas infrastructure in the country.

He insisted that the need for gas transmission network in the country is paramount and require additional efforts for fast coverage around the country. Government is also considering the idea of natural gas trading hub in the country to increase the consumption of natural gas in India with respect to liquid fuels among domestic and industrial sector. LNG production around the globe is significantly increasing which presents a huge opportunity for LNG terminal operations, engineering, procurement, and construction services in India.

Inception of natural gas hub in India is an ambitious move from the government and it is still under nascent stage of consideration as the challenges are huge to convert it into reality. Pipeline network in India is still under developing stages and most of the LNG terminals in the eastern part of India are under construction. Most of the natural gas transmission pipelines are underutilized and need constant supply of natural gas for even distribution to CGD entities. CGD coverage in India is also low and needs further push through innovative planning. Reduced natural gas production from ageing oil and gas fields also represents domestic natural gas supply constraints to power and fertilizer sectors which can’t afford imported R-LNG. Demand from refining sector is also constantly increasing owing to capacity expansion and new capacity addition.

Apart from all the constraints, for the development of natural gas hub, India must follow the examples of existing gas hubs around the globe such as USA and UK. These are developed gas markets and also involved in gas trading around the globe. Natural gas infrastructure in UK and USA is well developed and utilize advanced technology for monitoring the natural gas movements whereas in India pipelines are still in developing phase. It took around 5-6 years of time span for development of natural gas hub infrastructure in USA and UK, whereas India is still struggling in interconnecting the supply pipelines with transmission pipelines for uninterrupted gas supply. Apart from infrastructure, a unified and regulated tariff system is also required for gas marketing. It should be ensured that all stakeholders should get regulated returns on investments. Gas procurement would be another issue for the successful operation of gas hub. Growing prices of natural gas around the globe and low domestic productivity of natural gas would be a major factor in deciding gas tariff. Deregulation of gas prices would further affect gas trading from India and it would increase the gas prices in domestic market. Policies regarding imported LNG pricing should be made in accordance with the domestic market as country’s demand should be met first in the first place.

Apart from GAIL, another regulatory body should be framed, to manage such a big stretch of gas pipelines around the country. It would reduce the burden from GAIL and moreover it would also promote work efficiency and ease in execution of operations. For procurement of cheap priced gas, transnational gas pipelines are viable options but they are still subjected to international scenario and inter-national tensions prevailing around the Middle East region. Transnational pipelines such as TAPI would insure regulated and cheap gas supply to the country. Some of the constraints regarding the transnational pipelines are the cost of project, gas pricing, flexibility of operations, Pipeline funding, and selection of commercial consortium.

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