Under-priced fuel to cost oil retailers Rs 65k cr

State-owned fuel retailers IOC, BPCL and HPCL are likely to lose Rs 65,000 crore on selling diesel, domestic LPG and kerosene below cost during the current fiscal, Oil Minister Murli Deora said on Wednesday.

"Oil prices in the international market are again on the rise. Currently, oil marketing companies are incurring under recovery (revenue loss) of Rs 4.11 per litre on diesel, Rs 16.88 per litre on kerosene and Rs 272 per cylinder on domestic LPG sale," he said.

Addressing a meeting of the Parliamentary Consultative Committee, he said the Government will continue to closely monitor prices and will strive for a balance between consumers' interest and financial health of oil PSUs.

Deora said the New Exploration Licensing Policy (NELP) since its inception in 1999, has resulted in an increase in sedimentary basin under exploration over five times from just 11 per cent to 58 per cent.

Natural gas production has increased 75 per cent from around 80 million standard cubic meters per day to 140 mmscmd at present.

"Under NELP regime, 87 oil and gas discoveries have been made in 26 exploration blocks. Till now total investment made in NELP by Indian and foreign companies are of the order of USD 14.8 billion," he said.

He said 34 oil and gas blocks have been offered in the ninth round of NELP, bids for which close on March 18, 2011.

ONGC Videsh Ltd, the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), is currently producing oil and gas from 9 projects in 7 countries.

"OVL's consolidated share in production of oil and oil equivalent gas was about 8.87 million tons from its assets abroad, which is almost 26 per cent equivalent of crude oil produced in India during 2009-10," he said, adding that OVL has so far invested Rs 56,200 crores to acquire oil equity abroad.

To ensure uninterrupted supply of petroleum products in the event of contingency, the government is setting up 5.33 million tones strategic crude oil storages at three locations - Visakhapatnam, Mangalore and Padur (near Udupi) at cost of Rs 2,400 crores excluding the cost of crude oil, he said.

India's oil refining capacity will reach 238 million tonnes per annum by 2012 after new refineries at Bina in Madhya Pradesh, Bhatinda in Punjab and Paradip in Orissa are commissioned.

The country at present has a refining capacity of 185 million tonnes, he said, adding that IOC was building a 15 million tonnes unit at Paradip, BPCL has completed construction on a 6 million tons Bina refinery and HPCL is building a 9 million tons facility at Bhatinda, Punjab. Besides, existing refineries, too, are being expanded.