Hydrocarbon Vision 2025

Presentation by: Saurabh Sahni Prashant Ojha Rajat Deep Singh

Major Projection
Demand for Natural Gas will go up to 380 million standard cubic meters per day by 2025

Agenda for Implementation

Achievement of 100% coverage of unexplored basins to make increase domestic supply of oil & gas. Initiate projects to cover up the deficit domestic demand and supply of natural gas, and facilitate availability of LNG. Establish more of storage houses for crude & petroleum products at different locations. Maintain adequate levels of self-sufficiency in refining

 Create adequate infrastructure for distribution & marketing of oil & gas. Open up hydrocarbon markets to ensure fair competition between PSUs, private companies & international players. Better policy framework for cleaner & greener fuels. Establish rational tariff & pricing policy. Announce long-term fiscal policy to attract more and more investors in the hydrocarbon sector.

Medium Term Plan

Continue Exploration in producing basins Pursuing exploration aggressively in nonproducing basins. Making available sufficient resources for appraisal of unexplored basins through Oil Industry Development Board (OIDB) & other approaches. Optimize recovery from developed/explored fields. Ensure adequacy of finances for R&D required for building knowledge & infrastructure.

 Make Exploration & Production (E&P) compatible with the environment, & reduce discharges. Acquire acreages abroad for exploration as well as production.

Natural Gas
It is being seen as the fuel of the future Environment friendly, economically attractive and a desirable feedstock.

Objectives
Encourage use of natural gas, which is a relatively clean fuel Ensure ample availability of natural gas To tap on unconventional sources of natural gas, like coal bed methane, natural gas hydrates, underground coal gassification, etc.

Achieving the objectives

Timely review of the demand & supply of natural gas to facilitate policy interventions. Importing gas from neighboring & other countries with emphasis on transnational gas pipelines. Import LNG to supplement the domestic gas & encourage companies to participate in LNG chain. Ensure reasonable transport tariffs. Rationalize custom duty on LNG & LNG projects.

 Formulate national policy on Underground Coal Gassification in a time bound manner. Increase R&D efforts to convert gas into liquids.

Refining & Marketing

Objectives
Maintaining 90% of self-sufficiency in the sector with appropriate mix of PSUs, private oil companies & international players. Develop a globally competitive industry. Have a free market & healthy competition among players. Develop appropriate infrastructure, such as ports & pipelines Make available un-adulterated quality oil products at reasonable prices. Providing certain products at subsidized prices in some remote areas.

Crude Oil
We currently import over 70% of our crude oil requirements. Thus, great need to increase production & take the country to self-sufficiency.

Current Scenario
New Exploration blocks approved under NELP.

Action Plan
Grant operational flexibility to refineries in crude sourcing & in respect of risk management through hedging. Setting up timetable to achieve product quality norms to comply with cleaner environmental standards. Formulate a clear long-term fiscal policy to facilitate investment in refining & infrastructure. Grant full freedom to existing PSUs to establish & maintain marketing networks & allow entry of new players through a clear criteria.

 Make marketing rights for transportation fuels conditional to one company investing or proposing to invest Rs.2000 crores in E&P & refining. Set up mechanisms to allow new entrants to set up their own networks of marketing. To ensure a uniform State level taxation on petroleum products. Increase ceiling of FDIs from current level of 49% to 100%. Provide level tax rates for domestic products vis--vis imported products.

Tariff & Pricing

Objectives
Provide incentives for cleaner & greener fuels to promote environmental friendly hydrocarbon sector. Balancing the Govt. revenue along with moving the prices to international levels. To promote new investments, and at the same time, taking care of domestic producers. Remove subsidies to ensure optimum utilization of scarce resources.

Action Plan
Phase out existing subsidies as soon as possible. Set up a Group of experts to determine appropriate levels of tariffs & duties. Provide concession on supplies to far flung, remote areas. Increase linkage of natural gas price from current level of 75% fuel oil (FO) import parity to nearly 100%.

Restructuring & Disinvestment

Objectives
Maintain long term profitability. Strengthen competitive edge of the concerned companies in the context of changes in market forces. Ensure that the customers benefit by the restructuring.

Action Plan
Announce policy in regard to PSUs in alignment with overall disinvestment policy of the Government. Complete the internal restructuring of oil PSUs by making full use of IT. Implement proposals of mergers of oil PSUs to enhance shareholder value. Disinvest in a phased manner in oil PSUs down to appropriate level to realize best shareholder value.