India's Petroleum Secretary S C Tripathi Thursday said that the ministry was looking at issuing oil bonds of Rs 11,500 crore (Rs 115 billion) to oil marketing companies - Indian Oil Corporation, Hindustan Petroleum, Bharat Petroleum and IBP Ltd - to cover their under-recoveries.
The petroleum ministry had earlier proposed an issue size of nearly Rs 16,000 crore (Rs 160 billion). The finance ministry had rejected the proposal as it said that the cabinet had approved of an issue size of Rs 10,000-12,000 crore.
Tripathi told the Economic Editors' Conference that Bharat Petroleum and Hindustan Petroleum were expected to turn around in the second half of the current financial year.
The companies had reported net losses during the first half. International crude prices have softened helping the companies wipe out under-recoveries on the sale of petrol and diesel though sale of cooking gas and kerosene (sold through the public distribution system) continued to be loss-making.
He said discounts of $18-10 a barrel on the sale of crude by Oil & Natural gas Corporation and Oil India Ltd to oil refiners and discounts by refiners to oil marketing companies had also helped in checking the impact of an oil price rise. In addition, oil marketing companies had to bear a part of the burden through under-recoveries.
Tripathi also said that the cooking gas shortage faced in a large part of the country would be overcome within the next 15 days.
'The shortage would be overcome owing to increased imports and commencement of production from Reliance's Jamnagar refinery,' Tripathi said. he said, as a long-term measure, the refineries should have a product mix that could help avoid such shortages in the future.
He said the Petroleum and Natural Gas Regulatory Board Bill may be taken up by the Union cabinet next week and the ministry intended to table it in Parliament during the winter session with an aim to have the a regulatory structure in place by May next year.
The new regulator would handle the downstream sector and monitor oil refining and marketing companies. The directorate general of hydrocarbons, which is already operational, may be made a statutory body and would look after upstream segment, Tripathi said.
Asked about the disclosure norms for oil and gas finds by exploration companies, he said the norms for companies that have signed production sharing contracts with government are already in place as per requirements of the Securities & Exchange Board of India.
Disclosure norms for non-PSC finds are also proposed to be similar to that of PSC discoveries, he said, adding the directorate general of hydrocarbons would be working on it.
ONGC chairman and managing directorSubir Raha told reporters on the sidelines of the conference that India will start buying 120,000 barrels per day (bpd) of Nigerian crude oil in two months. Indian Oil already has a term contract for 40,000 bpd.
The ONGC-Mittal joint venture will be able to take another 80,000 bpd in about two months,' he said. The ONGC-Mittal joint venture company signed an agreement in last week to invest in Nigerian infrastructure, exploration and buy Nigerian crude. Raha said the company's agreement with Nigeria will be followed up with a binding contract in two months.