With global oil prices halving, Oil Minister Dharmendra Pradhan has said that India should aggressively look for acquisition of oil and gas assets overseas, build strategic reserves and step up domestic exploration and also tie up supplies on favorable terms from producers in Middle-East, Africa and Latin America.
Pradhan further stated that falling of oil prices globally presents opportunity for India to aggressively buy oil and gas fields abroad, as this fall has not only brought down assets valuation, but has also led to distress in some others that had borrowed huge funds when oil rates were high. Meanwhile, low oil prices have also led to slump in cost of associated services like drilling rigs, where India should take advantage for increasing domestic exploration and production (E&P) activities. Besides, he added that more wells should be drilled to find new reserves. Pradhan stated that India should use the low oil prices to stockpile oil at near complete underground strategic storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka. Furthermore, capacity should be raised from 5.33 million tons to guard against crude price shocks and supply disruption.
India, being 80% dependent on imports to meet its oil needs, has a direct beneficiary of oil prices slumping from $115 per barrel to under $50 in last one year. Besides cutting its oil import bill, lower oil prices have also helped cool inflation and cut government's subsidy bill. Last year Prime Minister has set up a target of cutting country’s oil import dependence by 10 per cent to 67 per cent by 2022.
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