´´I am delighted to be present in this historic city of Madrid with professionals of oil and gas sector from all over the world sharing ideas on the challenges facing us.
2. India’s population has crossed the 1 billion mark. To maintain high growth rate of the economy, we need substantial amount of oil and natural gas.
3. India is currently world’s fifth largest consumer of energy and accounts for nearly 3.5% of world’s energy consumption. Our consumption of oil has been on the increase. Till the mid of 80s, we had been self- sufficient to the extent of 70% in oil. Today we are importing around 75% of our oil requirements.
4. A small section of the oil analysts has been ascribing the relentless rise in crude prices in recent months to the spurt in demand for oil from India and China. I wish to take this opportunity to set the record straight. While China and India account for over one-third of the global population, their combined oil consumption is less than one-eighth of the world’s consumption. And, with steadily declining energy intensity, both our countries are registering rapid economic growth with less than proportionate increase in oil demand. And their high rates of economic growth are a significant factor in ensuring stable and orderly growth of the world economy. India’s refining capacity today stands higher than our oil demand. This has a sobering effect on the product prices by reducing the mismatch between product demand and supply. Given these facts, we are of the firm view that attribution of high crude prices to rising demand from India and China is completely devoid of merit and misses the wood for the trees.
5. Economic growth rate of 9% to 10% calls for rapid development of energy market. India’s energy needs are growing as income levels and population are both rising. Our main focus is to enhance energy security for the country. Government of India and Oil Companies have taken several steps to enhance energy security for the country, which include : (a) increasing exploration and production activities in the country (b) acquiring oil and gas assets abroad (c) development of alternate sources of oil and gas (d) strategic storage of crude oil (e) conservation of oil and implementation of environment friendly policies.
6. The development of E&P sector has been significantly boosted through the New Exploration Licensing Policy of Government of India, which ushered in major liberalization in the sector and opened it up to for private and foreign investment, where 100% Foreign Direct Investment (FDI) is allowed. Before implementing new exploration licensing policy (NELP), 11% of Indian sedimentary basins was under exploration which has now been increased to cover 44% of Indian sedimentary basins. In the next four years, it is planned to increase coverage of 80% of total Indian sedimentary basins. By 2015, entire area of Indian sedimentary basins is likely to be under exploration.
7. Under NELP, licenses for exploration are being awarded only through a competitive bidding system. Six rounds of bids have so far been completed under NELP, in which 162 exploration blocks have been awarded. 60 oil and gas discoveries have already been made in onland and offshore areas including deepwater, for which development plans by the operators are in progress. In India, apart from the two national oil companies, ONGC & OIL, more than two dozen foreign companies are working in E&P sector including global majors like BG, BP, ENI, Petrobras, Santos, Cairn and NIKO.
8. With recent exploration and development efforts under way in India, Crude oil production is likely to increase by over 30% in the next five years. Similarly, by year 2012 natural gas production will more than double from the present level of about 90 million standard cubic metres per day (MMSCMD). The seventh round of NELP has been very successful as 96 companies including 21 foreign companies, have submitted 181 bids for 45 exploration blocks. We will be awarding these blocks shortly.
9. In view of unfavourable demand – supply balance of hydrocarbons in the country, acquiring equity oil and gas assets overseas is one of the important components of enhancing energy security. The Government is encouraging Oil PSUs, ONGC Videsh Limited and others to aggressively pursue equity oil and gas opportunities overseas. In addition, private companies such as Reliance Industries Limited, Essar and Videocon are also investing on overseas E&P assets. Indian companies now have presence in 22 countries. ONGC Videsh Ltd. (OVL) has made an investment commitment of over US$ 7 Billion and had an oil and gas production of 8.92 million tonnes in the year 2007-08.
10. Ensuring uninterrupted availability of petroleum products is essential for sustained economic growth. To achieve this, in the downstream sector, India has doubled its refining capacity in last 10 years.
11. India’s geographical location between East Asia and the Middle East makes it ideally placed to emerge as an export hub for the growing Asia Pacific market. Our product exports have soared more than 10 times, from 2.4 MMT in 1997-98 to over 32 MMT in 2007-08, with foreign exchange earnings of about US$ 26 billion. Over the next four years, Indian downstream companies, both public and private, are poised to set up new refineries that will enhance capacity by an additional 90 MMT, with a cumulative investment of US$ 22 billion. We are committed to increasing the product availability for the domestic market and also meeting the requirements of the export market.
12. Holding the price line of life-line fuels is important from the point of view of ensuring equitable access to the weaker sections of the society, in the interest of inclusive growth. To protect the domestic economy from the inflationary impact of high oil prices, we have taken steps to stabilize the retail selling prices of life line fuels so that the weaker sections of the society are not affected. The issue of subsidy on life-line fuels is a sensitive one. While we agree that fuel subsidies may have a negative impact on the energy market in the long run, the current volatility in the international oil prices and its potential for destabilizing emerging economies, makes States’ intervention in pricing of life-line fuels inevitable.
13. The national endeavour to bridge the ever-increasing gap between demand and supply of petroleum products in India by intensifying exploratory efforts for oil and gas in the Indian sedimentary basins and abroad need to be supported by other alternate sources of energy like Coal Bed Methane, Gas Hydrates, Coal Liquefaction, Ethanol and bio-diesel etc. I am happy to inform you that the first CBM gas production from one CBM block in India has commenced in July 2007.
14. Towards other efforts for energy security, Government is pursuing Iran-Pakistan-India (IPI) Gas Pipeline, Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline and Myanmar-India Gas Pipeline Projects.
15. Creation of proper gas infrastructure network is crucial to evacuate the gas produced from the field. Presently GAIL is operating about 6170 km gas pipeline and authorization for laying additional pipeline of about 3400 km has already been issued. In addition Reliance Gas Transportation Infrastructure Limited (RGTIL) has plan of laying gas pipeline of 1386 km from Kakinada to Ahmedabad. RGTIL has also been given authorization for laying another four pipelines with total length of 2875 km.
16. The continuous rise in crude oil price in the last ten years is not sustainable over longer period. Now, time is ripe to find out new technologies, which are harmonious to economic growth and environment friendly as well. In this regard, developed countries should take pro active actions in order to meet the growing energy demand of the world.
17. In India, we do believe in knowledge sharing for the benefit of people and harnessing natural resources judiciously while protecting the environment. We should employ the technology which is environmentally sensitive and socially acceptable. We should not forget the fact that the environment we are enjoying today belongs to future generations and we are custodians of these environs which must be handed over to our progeny with no damage whatsoever.
18. We would need to form strategic alliances and investments from major global players for technology, services and resources. Forums like WPC offer tremendous scope not only to discuss areas of mutual interest but also for paving the way for firming up alliances.
19. I am sure that WPC will offer enough opportunities for technological understanding and networking with people and companies for mutual benefit. I am also confident that the Council will come out with sustainable solutions for the overall benefit of the hydrocarbon sector.
20. With these words, I wish great success for the 19th World Petroleum Congress and fruitful outcome of the discussions and deliberations.´´