'Probe why petro majors are not coming to India'

There is a need to examine why petroleum giants are not investing heavily in India right from exploration and production to retailing, Indian School of Petroleum (ISP) director Sanjay Kaul said.

The government has already undertaken several measures to attract more foreign investment into the oil and gas sector in India, Kaul said.

"Policy makers should examine if integrated business opportunities are offered lucratively in the country, although a lot has been done in opening up the sector in India. We need to ask ourselves why major players do not have full-fledged operations in India while they have chosen a country like China," said Kaul.

Kaul said it appeared as if the government's policy offered concessions either in exploration and production, mid stream processes or down stream processes like refining.

"There are different entry barriers for different processes and there is a need to examine if a policy can be worked out where the bigger players find the conditions more suited for them. All international petroleum majors look for a comprehensive chain which they can operate in," said Kaul.

Kaul said there are about 6,300 petroleum companies in the US and 4,500 in the UK, but not many have entered India.

More than 90 per cent of these companies, Kaul said, will not be ready for a bank guarantee clause.

Kaul said the gestation period in the exploration and production industry is very high. Under such circumstances, provisions of tax holiday should be extended to it and the industries should be able to choose any ten of the 15 years for tax holiday.

This, Kaul said, was not the case of the exploration and production sector, where tax holiday was just for seven years.

Kaul said a big advantage of having a presence in the entire chain was that companies can cushion fluctuations in prices more effectively.

"If there is a hike in oil prices, retailing might be affected, but it will definitely be a boost for exploration and production activities," said Kaul.