Booming gas sector in near future
Investors have been urged to consider the plethora of opportunities offered by the natural gas sector at a time when government is focusing on increasing the share of natural gas in overall energy needs of the country.
It is a sector with immense potential to create wealth for the promoters of companies, said D K Sarraf, Chairperson, Petroleum & Natural Gas Regulatory Board (PNGRB), Government of India, in urging the investors at the National Oil & Gas Conclave 2020 held in New Delhi on 29 Jan 2020.
He cited the example of Adani Gas and other firms that earned huge profits and increased the wealth of the companies to enthuse small and medium investors to look at the exciting opportunities up ahead.
The 11th round of bidding will be announced very shortly, he added.
There was a great interest generated in the previous rounds of bidding in which several bidders got licenses.
In the 9th round 86 bidders got licenses and in the 10th round another 50 were given licenses.
The gas sector will be booming in the near future because the government had taken policy initiatives to increase the share of natural gas in the basket of energy sources from the present 6% to 15% by the year 2030.
Plans are to double the present 15,000 km of natural gas distribution pipeline over the next few years, said Sarraf at the conclave organized by PHD Chamber of Commerce and Industry.
PNGRB has authorized construction of so many pipelines.
The country is also aiming to build a gas trading hub to help develop the domestic gas market and is working out regulations for the proposed hub, informed Sarraf. In this, the private operators are needed to be given operational freedom in marketing and pricing.
The PNGRB also wants the inclusion of natural gas in the GST regime, he said. Other than in the auto sector and households, the government is encouraging the use of gas by other industries as well.
The government has taken a series of initiatives to make the sector investor friendly. These were resulting in greater interest in bidding in the upstream projects by the private investors, he pointed out.
Since natural gas had a tremendous cost advantage over petrol, diesel, it would increase savings of the users and also for people who use piped gas supplies at home.
On the whole, India’s energy needs will only be increasing tremendously as the country progress in its journey towards the US$5 trillion economy by 2024.
A snapshot of what the government was doing in the sector was presented at the conclave by Amar Nath, IAS, Joint Secretary, Ministry of Petroleum & Natural Gas.
The sector presented adequate returns to investors in the upstream projects, he pointed out.
Outlining the various initiatives taken by the government, Nath said the increasing role the government is playing as a facilitator, not only in the Ministry but also helping investors with related work in other Ministries, the ease of doing business had increased.
The government does not intervene in operations and had given the investors greater freedom to choose the blocks they want to bid all the year-round as opposed to NELP where the government carved out the blocks.
The new Open Acreage License Policy gives the bidders an opportunity to bid all the year round and the bidders can choose an area which then is put up for bidding, said Nath.
He also mentioned the National Data Repository that is made available to all. The data repository, updated constantly, has been set up at a cost of Rs.3,000 crore.
The Government is also serious in getting feedback from the investors and incorporate suggestions that make the process easier, he said referring to a recent stakeholders meeting held by the Minister.
This is an effort to find out how best the government can help in the implementation of cleared projects. Then there is dispute redressal mechanism in place, he informed.
The Directorate General of Hydrocarbons (DGH) is working more like an agent of the investors from the private sector and a facilitator of the sector which is the key driver of the country’s economic growth.
As the country’s GDP grows, its energy requirements will also grow, added Dr. C Laxma Reddy, Additional Director at DGH.
India at present is the third-largest consumer of fuel after the USA and China and by 2040 India’s oil demand will double to 10 million barrels per day.
The government aims to increase domestic production to at least substitute 10 per cent of imports.
The new bidding process, OALP, is but one of the initiatives taken by the government to improve the ease of doing business.
Four rounds of OLAP bidding have been carried out and an area allotted is 136,000 sq km for this, said Dr Reddy.
The government policies are aimed at increasing output, increase in exploration in unexplored areas.
The national oil companies have also been allowed to have liaison with foreign companies to bring in technology that helps efficiency in production.
Dr. Reddy urged the industry to partner the government in the sustainable growth in the hydrocarbon sector.
Welcoming the guests, Sanjay Aggarwal, Senior Vice President, PHD Chamber, argued the case for sourcing India’s energy needs from sources other than the Middle East that at present was volatile and unpredictable.
As India’s oil requirements will grow in the future, this is one aspect, he hoped, the government will keep in mind.
The government has plans to increase share of natural gas to 15% in India’s fuel basket in order to make India a gas-based economy, he said.
Rajeev Kumar Mathur, Chairman, Hydrocarbons Committee, PHD Chamber, called on the states to come out with their respective state-specific natural gas policies that will enable clean fuel distribution across the country. fiinews.com