Time not ripe for upgrading DGH into an independent statutory body, says Petroleum & Natural Gas Minister, Dharmendra Pradhan

The Directorate General of Hydrocarbons (DGH) is unlikely to be upgraded into an independent statutory body like SEBI, given the stage of development of the oil and gas sector. This was indicated here today by Mr. Dharmendra Pradhan, Minister of Petroleum and Natural Gas, Skill Development and Entrepreneurship.

At present, DGH is charged with responsibilities such as implementation of New Exploration Licensing Policy (NELP), matters concerning the Production Sharing Contracts for discovered fields and exploration blocks, promotion of investment in E&P sector and monitoring of E&P activities including review of reservoir performance of producing fields. In addition, DGH is also engaged in opening up of new unexplored areas for future exploration and development of non-conventional hydrocarbon energy sources like Coal Bed Methane (CBM) as also futuristic hydrocarbon energy resources like gas hydrates and oil shales.

Mr. Pradhan said that in order to meet India's oil and gas requirements, the government has embarked on a multi-dimensional strategy that entails augmentation of production, efficiency in resource use and operations and development of alternative fuels. There is now pricing and marketing freedom for gas producers in future exploration bidding rounds and the government is committed to increase the consumption of natural gas through policy measures in each micro segment of consumption.

The Minister enumerated the steps proposed by the government in the oil and gas sector. These include the second phase of reforms, production of synthetic gas from coal which would be cheaper than natural gas and focus on development of bio-fuels by monetising the country's bio-diversity. Such fuels would be commercialised in the next two-and-a-half years, he said.

Mr. B. C. Tripathi, Co-Chair, FICCI Hydrocarbons Committee and CMD, GAIL (India) Ltd., underlined the need for industry, government and buyers to work together to work out a strategy for balancing imports and increasing domestic production for the country's energy security. While the focus on oil and gas was critical, industry should aim at complementing and supplementing the production of renewables, he added.

Mr. Sandip Somany, Senior Vice President, FICCI, stated that E&P was a very risky investment as after putting billions of dollars to explore hydrocarbons, there was no certainty that the output would be oil, gas or just nothing. Therefore, providing a transparent, predictable and stable risk and reward structure was the key to bring investments into the sector. In the national interest and in the interest of ensuring energy security, FICCI has been for long advocating offer of remunerative natural gas prices to the domestic gas explorers and producers. Such a price regime will bring in the much-required technology and risk capital to tap the unexplored resources, he said.

Mr. Amit Khera, Partner, McKinsey & Company, raised issues that should engage the stakeholders. These include: Whether gas pricing was sufficient to boost domestic production, the tax reforms needed, building the confidence of investors on stability of the fiscal regime, the steps needed to accelerate technology induction in the E&P sector, strengthening of national oil companies to perform at the global benchmark level and should DGH evolve into a statutory body.

Powered by Capital Market - Live News