Modi discusses oil and gas investments with global experts

he discussions focused on increasing the share of gas in India's energy mix; fresh investment in oil & gas exploration in India

To chalk out a vision for the energy sector, Prime Minister Narendra Modi on Tuesday interacted with global oil & gas experts, including BP global head Bob Dudley and International Energy Agency executive director Fatih Birol.

Royal Dutch Shell director (projects & technology) Harry Brekelmans and Pulitzer award-winning American author Daniel Yergin were also present during the meeting, which lasted for two hours. Besides, Union ministers Arun Jaitley, Piyush Goyal and Dharmendra Pradhan, NITI Aayog vice-chairman Arvind Panagariya, and top officials from the government and the NITI Aayog were present, according to an official statement. The discussions focused on increasing the share of gas in India's energy mix; fresh investment in oil & gas exploration in India; regulatory frameworks; international acquisition of oil & gas assets; emerging areas such as shale gas and coal-bed methane; and the oil & gas sector-related possibilities of Make In India programme.

While the National Democratic Alliance government has cleaned up retail pricing issues in diesel and petrol, it is yet to come up with an investment-friendly approach in the upstream oil and gas-producing sector. The new pricing formula for natural gas, which became applicable from November 1, 2014 and is revised every six months, has rendered investment in deepwater exploration and production business unviable, an issue conveyed by Oil and Natural Gas Corporation to the government earlier.

On October 18, 2014, the Cabinet Committee on Economic Affairs had decided to make changes in the formula notified by the United Progressive Alliance government in January 2014 by dropping both the Japanese and the Indian liquefied natural gas import components, and considering the Alberta Gas Reference price in place of Henry Hub and the actual Russian price in place of the National Balancing Point. By this formula, the prevailing domestic price is lower than $4.2 set for Reliance Industries and BP's KG-D6 production in 2008.

The presence of former oil secretaries Vijay Kelkar and Vivek Rae at Tuesday's meeting pointed to possible industry-friendly changes in the petroleum sector.

Modi is also understood to have stressed the need for green energy. Last week, the PM had formed eight groups of secretaries, one of which was on energy-efficiency and conservation. At Tuesday's meeting, Modi emphasised his vision for a fresh look at the sector, to bring in investment, technological upgradation, and development of human resources.

On the power side, efforts are currently underway for restructuring loans of power distribution companies owned by state governments through the Ujjawal Discom Assurance Yojana, or UDAY, scheme.