Concerned over the stagnate oil and gas production in India, Oil Ministry has urged the new government to take measures soon for enhancing the fuel exploration activities in the country. Oil Ministry has highlighted that the national oil companies such as ONGC and HPCL are losing focus on domestic exploration, while the signed contracts with private explorers such as Reliance Industries are going out of track.
Oil Ministry has reported that subsidy bill increased to $26 billion per annum but the domestic oil and natural gas production is not showing any sign of revival. Many decisions taken by the previous Government over the past few years have proved wrong. The landmark scheme of Direct Benefit Transfer on LPG (DBTL), where customers got subsidy in cash to buy cooking gas at market rates, was a mistake. Ministry further stated that production sharing contracts (PSCs) beleaguered by legal disputes and no clarity on engagement with Iran in view of US sanctions has not only delayed participation in a mega gas field but also hampered Iran-Pakistan-India gas pipeline. Oil Ministry is of the view that production sharing contracts must be revised based on the experience with existing contracts.
Presently, Oil Ministry has been engaging in a legal fight with Reliance Industries over the fall in natural gas output from the eastern offshore KG-D6 block. Output there has dipped to a tenth of the planned production of 80 million standard cubic metres per day. Oil and Natural Gas Corporation (ONGC) has started focus more on downstream business of petrochemicals as against its core business of producing more oil and natural gas. Furthermore, refiner Hindustan Petroleum Corp (HPCL) setting up sugar mills as an example of diversion from core activities.
India currently is the fourth largest oil consumer in the world behind the US, China and Japan, and imports around 80 percent of its oil needs. It is estimated that India will become the world's largest oil importer by 2020. So far, the country had not invested much in intensive exploration and exploitation of untapped oil and gas reserves in the country. Presently, only 0.93 million sq km area in India is held under exploration and production in 19 basins as compared to total estimated sedimentary area of 3.14 million square kilometres, comprising 26 sedimentary basins.
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