Energy is a key driver of economic growth and the government’s focus has been to bring about transformational changes in the energy landscape. The Petroleum and Natural Gas Ministry has endeavored to “reform, perform and transform’ the sector. The government has taken several reforms and accomplished major task with far-reaching impacts in the sectors of exploration and production, refinery, marketing, natural gas and international cooperation.
Exploration & production
A number of new initiatives have been taken in the last one year to promote exploration and production activities in the country. In a major policy drive to give a boost to petroleum and hydrocarbon sector, the government has unveiled a series of policy reforms. Some of the notable policy reforms are
i.) Hydrocarbon exploration and licensing policy (HELP)/ open acreage licensing policy (OALP): This is a paradigm shift from production sharing contract (PSC) regime to revenue sharing contract (RSC) regime based on the principle of ease of doing business. It provides for single license for exploration and production of conventional as well as non-conventional hydrocarbon resources; pricing and marketing freedom; reduced rate of royalty for offshore blocks, open acreage licensing policy that means option to select the exploration blocks without waiting for formal bid round. Expression of Interest can be submitted round the year and bidding is carried out every 6 months.
Under OALP bid round I, 55 blocks having area of 59,282 sq km have been awarded on October 1, 2018. OALP bid round II with 14 blocks is in the offering.
ii) Policy framework to promote and incentivise enhanced recovery methods for oil and gas: The government has approved the policy framework to promote and encourage adoption of enhanced recovery (ER)/ improved recovery (IR)/unconventional hydrocarbon (UHC) production methods/techniques through fiscal incentives and an enabling ecosystem to improve productivity of existing fields and enhance overall production of domestic hydrocarbons. The policy provides for systemic assessment of every field for its ER potential, appraisal of appropriate ER techniques and fiscal incentives to de-risk the cost involved in ER Projects and to make it economically viable.
iii) Discovered small field policy (DSF): For early monetisation of unmonetised discoveries of national oil companies (NoCs), Cabinet in September, 2015 approved 69 marginal fields for offer under Discovered Small Fields Policy. These contract areas are awarded under the new regime of revenue sharing model. Award of contract is expected to provide faster development of fields and facilitate production of oil and gas.
The first bidding round under the DSF policy was launched on May 25, 2016, thereby offering 67 discovered small fields in 46 contract areas of ONGC and OIL for international bidding. Total 30 contracts for 43 discovered small fields were signed with 20 companies in March, 2017. It is expected that in-place locked hydrocarbons volume of 40 MMT oil and 22.0 BCM of gas will be monetised over a period of 15 years.
On February 7, 2018, Cabinet has approved the DSF policy bid round-II, an extension of the DSF policy notified on October 14, 2015. Under DSF-II, 59 discovered small fields/unmonetised discoveries estimated to have 194.65 million metric ton (MMT) oil and oil equivalent gas in place are offered for bidding.
The second bidding round under DSF policy offering 59 discoveries clubbed into 25 new contract areas was launched August 9, 2018.
iv) National seismic programme of un-appraised areas: The government has taken up programme of undertaking 2D seismic survey of entire un-apprised areas. National seismic programme was launched on October 12, 2016. Under the programme, government has approved the proposal for conducting 2D seismic survey for data acquisition, processing and interpretation (API) of 48,243 line kilo metres (LKM). The estimated cost of the project is Rs 2932.99 crore and the project is proposed to be completed by 2019-20.
As on October 31, 2018, surface coverage of 28485 LKM, out of 48,243 LKM has been achieved under 2D Seismic data acquisition under National Seismic Programme.
v) Policy framework for streamlining the working of the production sharing contracts: Under this policy, government has allowed 2 years extension in exploration period and 1 year in appraisal period for operational blocks in NER besides allowing marketing including pricing freedom for natural gas produced in future in NER; sharing of the statutory levies including royalty & cess in Pre-NELP exploration blocks and to be cost recoverable with prospective effect; extending tax benefits under Section 42 of Income Tax, 1961 to operational blocks under Pre-NELP discovered fields prospectively.
vi) Re-assessment of hydrocarbon resources: A multi organisation team comprising of representatives of ONGC, OIL and DGH has carried out estimation of hydrocarbon resource potential in the country. The prognosticated conventional hydrocarbon resources in 26 sedimentary basins of the country are of the order of 41.87 billion tones (oil and oil equivalent of gas), which is about 49 per cent increase as compared to earlier estimates of 28.08 billion tones.
vii) Policy framework for exploration & exploitation of unconventional hydrocarbons under existing production sharing contracts, coal bed methane contracts & nomination fields: Government has approved the policy to encourage the existing contractors in the licensed/leased area to unlock the potential of unconventional hydrocarbons in the existing acreages. Under this policy, an area of 72,027 sq. km. held under PSCs and 5269 sq. km area under CBM contracts has been opened up for simultaneous exploration and exploitation of conventional or unconventional hydrocarbons.
In order to promote the usage of natural gas as a fuel/feedstock across the country and move towards a gas based economy, the development of additional 13,500 Km long gas pipeline is under way to complete the gas grid. The status of major under-construction gas pipeline project is:
i) Pradhan Mantri Urja Ganga Project:The 2655 km pipeline project is being executed at an investment of Rs.12,940 Crore, which includes 40 per cent capital grant (i.e. Rs 5,176 cr) from the Centre and the project is scheduled to be completed progressively by December, 2020. JHBDPL will cater to the energy requirements of five states -- Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal.
ii) Barauni - Guwahati Pipeline: To extend the gas grid upto north east, development of a 729 km long pipeline from Barauni to Guwahati has been allowed as an integral part of JHBDPL project. Pipe procurement and laying work tenders are under progress. This project is scheduled to be commissioned by December 2021.
iii) North East Region Gas Grid: To further extend the gas grid to each states of North-East and Sikkim, a Joint Venture company, named Indradhanush Gas Grid Ltd, has been formed by five oil & gas PSUs. This JVC will develop NER gas gird of about 1,656 km long in all north eastern states in a phased manner at the total cost of about Rs 9,265 crore.
iv) Kochi-Koottanad-Bangalore-Mangalore pipeline: GAIL is developing 872 km long pipeline at an investment of Rs 5,150 crore in the Kerala and Tamil Nadu. Construction is expected to be completed by mid of 2019.
v) Ennore-Thiruvallur-Bengluru-Puducherry-Nagapatinam-Madurai-Tuticorin pipeline: Indian Oil is developing a 1385 km pipeline at the investment of Rs 4,497 crore. This pipelinelaying work is under progress.
i) Pradhan Mantri Ujjwala Yojana: In order to provide clean cooking fuel to BPL households in the country, the government has launched Pradhan Mantri Ujjwala Yojana (PMUY) scheme to provide 5 crore deposit-free LPG connections to women belonging to the BPL families.Later, it was increased to 8 crore with a budgetary allocation of Rs 12800 crore.
The initial target of 5 crore connections was achieved well before the target i.e. March 31, 2019. As on 5.12.2018, more than 5.83 crore connections have been released under the scheme. Implementation of PMUY has resulted in significant increase in national LPG coverage, in general and eastern states, in particular.
ii) PAHAL: Government, as a measure of good governance, has introduced well targeted system of subsidy delivery to LPG consumers through PAHAL. The initiative of the government was aimed at rationalising subsidies based on approach to cut subsidy leakages, but not subsidies themselves.
As on December 6, 2018, more than 23.08 crore LPG consumers have joined the PAHAL Scheme. PAHAL has entered into Guinness book of world record being largest Direct Benefit Transfer Scheme. So far, more than Rs 96,625 crore have been transferred into the bank accounts of consumers.
PAHAL has helped in identifying ‘ghost’ accounts, multiple accounts and inactive accounts. This has helped in curbing diversion of subsidised LPG to commercial purposes. So far, estimated savings due to implementation of Pahal is approximately Rs 50,000 crore.
iii) Automation at OMC ROs: To enhance customer confidence through Q&Q (Quality & Quantity) of fuel and minimises chance of fraudulent transactions, the ministry has given target to OMCs to automate all ROs across the country wherever feasible. As on November 1, 2018, 70 per cent of ROs have been automated across the country.
iv) Promotion of digital payments undertaken by MoP&NG: There has been a significant expansion of digital payment infrastructure at retail outlets. As on November 20, 2018, 1,00,876 POS terminals and 92,408 e-wallet facility have been provided at 53,717 (98 per cent) petrol pumps across the country, 52,959 retail outlets have been enabled with BHIM UPI. All the LPG distributors and city gas distribution companies are enabled with BHIM UPI.
v) Retail outlet dealer selection advertisement released: Expansion of retail outlet network (petrol Pumps) is undertaken by oil marketing companies primarily to meet the growing fuel needs and convenience of customers in emerging markets like
upcoming highways, agricultural pockets and industrial hubs. The retail outlet network in rural, remote and far-flung areas are also being expanded with the intention of reaching product, ensuring quality and correct price to meet the rural agricultural demand and people living in remote areas. Additionally, the expansion of retail outlet network is expected to generate employment opportunities also.
RefineryOut of the 23 refineries operation in the country, 18 are in public sector, 3 are in private sector and two as a joint venture with a total refining capacity of 247.566 MMTPA. Out of the refining capacity of 247.566MMT, 142.066 MMT is in the public sector, 17.30MMT in joint venture and the balance 88.2 MMT is in the private sector. The country is not only self-sufficient in the refining capacity for its domestic consumption but also exports sufficient quantity of petroleum products.
Auto fuel policy
i) Introduction of BS-IV & BS-VI fuels: Ministry of Petroleum & Natural Gas has notified implementation of BS-IV auto fuels in the entire country in a phased manner. It has also been decided that the country will leapfrog directly from BS-IV to BS-VI fuel standards and BS-VI standards will be implemented in the country by 2020.
ii) Ethanol Blended Petrol (EBP) programme: For ethanol supply year 2018-19, the government has fixed remunerative price for ethanol procurement based on raw material utilised for ethanol production.
iii) Bio-diesel programme: Purchase orders have been issued by oil
marketing companies for supply of 8.14 crore litres of biodiesel during the period May – October, 2018, with provision for extension for three months.
iv) Second generation ethanol: Subsequent to opening up of alternate route i.e. Second Generation (2G) route for ethanol production, oil marketing companies are in the process of setting up 12 2G bio-refineries with an investment of Rs10,000 crore.
v) National policy on biofuels – 2018: The government has notified national policy on biofuels 2018 on June 2018 which is expected to give boost to the biofuel programme.
vi) Joining of advanced motor fuels: Ministry of Petroleum and Natural Gas joined Advanced Motor Fuels (AMF), a technology collaboration programme (TCP) under International Energy Agency (IEA) as member on May 2018. It is an international platform to promote collaboration in R&D for developing advanced motor fuels / alternate fuels with greater focus on improving fuel efficiency and reduced GHG emissions.
vii) SATAT Initiative: The ministry has decided to give vide publicity to the initiative of Sustainable Alternative Towards Affordable Transportation (SATAT initiative) by organising road shows in Bhubaneswar, Chandigarh and Lucknow to promote Compressed Bio Gas (CBG) production and use.
i) Overseas sourcing
February 2018, an Indian Consortium of OVL, IOCL and BPRL acquired 10 per cent participating interest in Abu Dhabi’s offshore Lower Zakum oil field.
*The first long term LNG cargo from US arrived at Dhabol on March 30, 2018.
*In April 2018, IOCL acquired 17 per cent stake in the Mukhaizna Oilfield, Oman.
*The first long term LNG cargo from Russia arrived at Dhahej on June 4, 2018.
ii) Important agreements / contracts
*Saudi Aramco and ADNOC signed an MoU in June 2018 to jointly develop and build an integrated refinery and petrochemicals complex promoted by Ratnagiri Refinery & Petrochemicals Ltd.
*India and US launched strategic energy partnership ministerial level energy dialogue process on April 17, 2018.
*PMs of India and Nepal launched the ground-breaking ceremony of India-Nepal petroleum products pipeline from Motihari to Amlekhgunj through live-streaming in New Delhi on April 7, 2018.
*A tripartite MoU was signed between Petronet LNG of India, Sri Lanka Ports Authority, and a Japanese company in April, 2018 to set up LNG terminal at Colombo.
*ISPRL and ADNOC (of UAE) signed a restated definitive agreement on oil storage and management on February 10, 2018 for filling 5.86 million barrels of crude oil in the Mangalore SPR facility.
*On September 18, 2018, India-Bangladesh Friendship Pipeline was inaugurated by the prime ministers of India and Bangladesh.
*On November 12, 2018 an MoU was signed between ISPRL and ADNOC for exploring participation of ADNOC in Padur SPR.
Source: Government of India