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Prime Minister Narendra Modi today said there is scope for further reforms in the country's energy sector as he met CEOs of top global and Indian firms to explore ways to raise domestic output and cut imports.
Chief executives of firms ranging from BP Plc of the UK to Russia's Rosneft, Exxon Mobil, Saudi Aramco and Royal Dutch Shell flew in specially for a three-hour meeting, in a rare display of their faith in India and its policy reforms, top sources said.
In the three-hour long meeting, the honchos appreciated the reforms initiated in the last 40 months which has created an environment for companies like BP to revive USD 6 billion in investment plan in gas production and Saudi Aramco to consider investing in refining and petrochemical projects, they added.
"The absolute coordination between policy, strategy and implementation came in for special praise with some CEOs saying they have not seen any parallel world over on the speed with which reforms have been implemented," a source said.
Modi, they said, at the meeting stressed that India in the energy sector is growing vertically - from exportation to midstream refining and fuel distribution and technological innovation, as also horizontally in taking energy to last man in the queue by giving over 3 crore free LPG connections in last 15 months and promising 4 crore electricity connections to 4 crore households in the next 15 months.
"India is priority for investment for them," another source said, adding speakers praised reforms like deregulation of auto fuel prices, gas pricing and marketing freedom, production augmentation strategy and new policy for exploration and production.
India, the world's third-biggest oil consumer, is using its market size to strike better deals with oil exporters and attract investment into upstream exploration, refining and petrochemical industries.
"Participants appreciated the pace and drive with which Prime Minister Modi has brought about reforms in the energy sector," a statement issued by Prime Minister's Office said.
Subjects such as the need for a unified energy policy, contract frameworks and arrangements, requirement of seismic data sets, encouragement for biofuels, improving gas supply, setting up of a gas hub and regulatory issues came up for discussions, it said.
The CEOs also suggested including natural gas and electricity in the GST regime to make these competitive.
Modi, who had previously met a smaller group of oil and gas CEO in January 2016, said the status of the energy sector in India was highly uneven and there exists a scope for reform in many areas, according to sources.
More than a year after the January 2016 meeting, the government had allowed higher natural gas price for yet-to- be-produced fields in difficult areas like deep sea.
The main theme of today's meeting, sources said, was to seek investment in exploration and production, processing, transportation and distribution network in oil and gas.
Some of the officials suggested that the government should allow private and foreign firms to take a stake in producing oil and gas fields of ONGC with a condition that they would get a fixed USD per barrel fee for producing more than the pre-determined baseline output.
The government is looking at private investments to raise domestic oil and gas production, which has stagnated for the last few years while fuel demand has been rising by 5-6 per cent annually.
Modi in 2015 had set a target of reducing India's oil dependence by 10 per cent to 67 per cent, based on import dependence of 77 per cent in 2014-15, by 2022. The dependence has since risen to over 80 per cent.
Sources said the participants at the meeting felt that investing in new unproven areas is not just risky with no guarantee of results but would also take a long time.
Involving companies with proven technology and having capital in existing producing fields for improving output is the way forward, they said.
Modi welcomed the suggestion made for a comprehensive energy policy, the statement said.
He also welcomed all possibilities for innovation and research in the oil and gas sector, the release said, adding that he flagged the potential of biomass energy and invited participation and joint ventures in the coal gasification.
According to the release, Modi also said that "scope for reform in many areas still exists".
He thanked all participants for sharing holistic suggestions, keeping in mind India's unique potential and requirements in the oil and gas sector, instead of merely confining themselves to the concerns of their respective organisations.
He observed that the suggestions made today covered policy, administrative as well as regulatory issues, while stressing upon the need to develop energy infrastructure and access to energy in eastern India.
Oil Minister Dharmendra Pradhan told the gathering that the liberalised India offers around USD 300 billion investment opportunity in the next 10 years in the oil and gas sector.
"We want investors, both domestic and global, who can bring in the best technology and capital," he said.
The government is devising policies to more than double the share of gas in the energy basket to 15 per cent.
"We are planning a gas trading exchange and making sure there is open access to the gas grid. Global experience in this area would be useful," he stated.
According to Pradhan, in the last 40 months, the government has taken several policy initiatives in the energy sector in line with the prime minister's vision of energy access, efficiency, sustainability and security.