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Hydrocarbon Vision-2025 aims to propel India into the big league

Shobha Warrier in Madras

While inaugurating the seminar on petroleum fuels at the Energy Summit 2000 organised by the CII, the Union Minister of Petroleum and Natural Gas, Ram Naik, presented a picture of hope.

His optimism raised a few eyebrows in light of the fact that he was forced to increase the prices of petroleum products and later partially roll them back at the instance of the prime minister.

Excerpts of his views at the seminar:

Deficit

The minister justified his decision to hike petro tags as the price of Brent crude which was Rs 3,313 per tonne ($10.23 per barrel) in February 1999 went up to Rs 8,944 per tonne ($27.26 per barrel) in March 2000. By September 2000, it reached a ten-year high of Rs 12,000 per tonne ($37 per barrel)!

The consumption of oil and gas by the Indian market is growing at an annual rate of 6-7 per cent whereas the world average is only 2 per cent. Internal production is just 30 per cent and the remaining is 70 per cent of is imported. This is responsible for its huge import bill and oil pool deficit.

The import bill, which was Rs 535 billion in 1999-2000, is expected to touch Rs 800 billion in 2000-2001! And, the monthly deficit of oil pool account is Rs 2.5 billion.

Exploration

"So, the only option for us is to increase indigenous production. Only 23 exploration blocks were sanctioned in the last eight years. But after I took over, I have sanctioned 25 new blocks in the last seven months under the New Exploration Licensing Policy. Before December 31, 2000, the government will come out with another 25 blocks," Ram Naik proudly announced.

The blocks awarded include 7 deep-water offshore blocks, 16 shallow water offshore blocks and 2 on-land blocks. This is for the first time in India that a deep-water block has been awarded in India.

"For the first time in the country, ONGC has discovered gas in deep sea at the Krishna-Godavari basin just ten days back!" he informed

Refineries

He announced that India has attained self-sufficiency in refining and eliminating direct import of costly finished products. The refining capacity of the country stands at a level of 112 million tonnes per annum now.

The government has already started construction of three more new refineries to make India 'more self-sufficient'.

The Indian Oil Corporation is constructing a 9 mmtpa (million metric tonnes per annum) refinery at Paradip in Orissa, Hindustan Petroleum (HPCL) a 9-mmtpa refinery at Bhatinda in Punjab and Bharat Petroleum (BPCL) is constructing a 6-mmtpa refinery at Bina in Madhya Pradesh.

These projects are likely to be completed in three years, the minister said. Still, the government was looking for foreign investors as joint venture partners, he added.

Subsidies

"The days of subsidy will soon be over. The subsidy for the PDS kerosene will be only 33.3 per cent and LPG for domestic use will be 15 per cent by the year 2002. The expenditure for both the subsidies will be from the general budget and not from the oil pool account," he said.

"In November 1997, the government announced a detailed framework of phasing out the administered price mechanism (APM) by gradually doing away with subsidies in the consumer prices of petroleum products and rationalising customs and excise duties structures during 1998-2002. The customs duty on import of crude oil is being brought down, and that on products is being rationalised," he said.

LPG connections

From October 1999-September 2000, 127,000 new LPG connections were given as against 425,000 connections in the last 45 years. Naik said that LPG connections are available across the counter all over India.

India Hydrocarbon Vision-2025

Committees and vision statements are not new to Indians. Everyday, one hears about a new policy and a new statement. Nobody talks about the outcome of the committees and statements, though.

The Vision 2025 document is a policy document formulated by a group of ministers comprising the minister of petroleum and natural gas, the finance minister, the external affairs minister and the deputy chairman of the Planning Commission.

"It visualises Indian hydrocarbon sector to be a globally competitive industry benchmarked with the best in the world and promoting healthy competition in the market," informed Naik

It states that:

• By the year 2025, petroleum product demand would go up 4 times to about 370 million tons per annum.
• Refining capacity would go up from 112 to about 360 million tonnes at a cost of Rs 2500 billion.
• Pipeline capacity requirement would go up from 30-170 million tonnes at the cost of Rs 210 billion for transportation of about 45 per cent of petroleum fuels.
• Storage capacity requirement would go up from 9-27 million tonnes, at the cost of over Rs 160 billion.
• The investment needed to setting up retail outlets for the sale of about 133 million tonnes per annum of motor gasoline and diesel is estimated at Rs 930 billion.

Fuel from sugarcane

The government has initiated three pilot projects for blending ethanol with petrol to the extent of 5 per cent. Two of the three pilot projects are located in Maharashtra at Manmad and Miraj, and the third will be at Bareilly in UP.

"Gasohol is widely used in Brazil and it is expected that its adoption in India would lead to more remunerative prices for sugarcane farmers and reduction in pollution caused by automobiles. Above all, it will satisfy the swadeshis," said Naik.

Out of Indian borders

Indian companies are venturing out of Indian borders in search of oil. ONGC Videsh is already working in a field in Vietnam, which is likely to go into production of natural gas during the next year. An exploration contract was signed between ONGC Videsh and the Oil Exploration Company of Iraq when the vice-president of Iraq visited India recently. Now, ONGC will enter Iraq to explore oil and in exchange India will export wheat, tea and rice to Iraq.

Tailpiece

Ram Naik's wife tackles the increase in the price of LPG by not heating up the cold dinner for the minister when he turns up late at night, and by not offering hot tea or coffee to all those who visit the minister at home. Only nimbu paani (lemon water) for the visitors.

SEE ALSO:

Govt to unveil renewable energy policy soon

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