Saturday, December 19, 2009

2009 Marked by important milestones in oil and gas sector

Year End Review - 2009

The Year 2009 has been quite significant for important initiatives of the Ministry of Petroleum & Natural Gas in the oil and gas sector. The commencement of natural gas production in KG basin and crude oil production in Rajasthan were amongst the major milestones achieved during the year. The consumers were insulated against highly volatile global oil prices. Apart from steady progress in implementing the new grass root refinery projects, the Ministry launched a number of consumer friendly initiatives/schemes like toll free complaint no., SMS booking and a scheme for promoting small LPG dealerships in rural areas.

In the upstream exploration production activities, the production has been nearly stagnant for over a decade. This year, the oil and gas production will increase significantly, oil by 11% and gas by 53% over the previous year. World’s largest gas discovery of 2002 (KG D-6) was put on production with effect from April 1, 2009 which will nearly double the supply of much needed natural gas for Indian industries. Another historical milestone was achieved with the Prime Minister inaugurating the production of crude oil from Barmer Oil Field in August 2009. The successful completion of 8th round of New Exploration Licensing Policy and 4th round of Coal Bed Methane Policy in the face of global recession was in itself a major achievement. The response of bidders when compared to similar offers elsewhere in the world was one of the best during the year.

This year, Government also announced seven-year tax holiday for commercial production of gas in respect of contract to be signed under NELP VIII & CBM IV with a view to give a boost to exploration & production.

In order to optimize utilization of natural gas in the country, an in principle decision was taken to promote national gas grid on the pattern of national highways of the country. This will help connect various sources of natural gas to different demand centers all over the country. A road map was also formulated during the year to substantially expand the City Gas Distribution(CGD) by identifying over 200 cities for CGD projects. Further, an Empowered Group of Ministers (EGoM) decided to allocate an additional quantity of 61.6 Million Metric Standard Cubic Metre Per Day(MMSCMD) gas on firm basis and 30 MMSCMD on fall back basis to various priority sectors from KG D-6 field in October this year. These sectors include: power (firm-31.165, fallback-12); fertilizer(firm-15.508); CGD(firm-0.83, fallback-2); Steel (firm-4.19), Refineries(Firm-5, Fallback-6); Petrochemicals(firm-1.918); LPG(firm-3) and Captive Power(fallback-10).

Extending benefits of the fall in global oil prices to common man, Government reduced the prices of petrol by Rs. 5 per litre, diesel by Rs. 2 per litre and of LPG by Rs. 25 per cylinder in January 2009. The Government continued to insulate the consumers against full impact of rise in global oil prices which rose from monthly average prices of US$ 44.02/bbl of Indian Basket of crude oil in January 2009 to US$ 75.64/bbl in the first fortnight of December 2009. The Government along with its PSUs shared a large burden of about Rs. 1,06,000 crore of the under recoveries (about Rs. 74,000 crore Govt.’s oil bonds and about Rs. 32,000 crore discounts by upstream PSUs) to contain the impact of high oil price on consumers during 2008-09. An Expert Group was constituted for suggesting viable and sustainable pricing policy in the light of which Government will consider suitable pricing policy initiatives.

The implementation of three new grass root refinery projects at Bhatinda(Punjab), Bina(M.P.) and Paradip(Orissa) continued to achieve steady progress during the year to consolidate the existing surplus refining capacity in the country. Towards strengthening oil sector infrastructure, a major oil terminal on HPCL’s Mundra-Delhi Pipeline (MDPL) at Bagru near Jaipur was inaugurated in February 2009 which improved the smooth movement of petroleum products across various States. The pipeline came in handy to ensure availability of the products in Rajasthan in the wake of major fire at IOC’s Oil Depot near Jaipur.

In order to enhance availability of right quality and quantity of petroleum products, the Government approved Vision 2015 in June 2009 aimed at expanding the marketing network as well as quality of the products and services specially in rural areas. The year saw implementation of the Vision with launching of a smaller six digit toll free complaint number for all the three Oil Marketing Companies (OMCs) viz. IOC, HPCL and BPCL. A facility for booking LPG through SMS and getting timely information about delivery status was also launched in August this year.

With a view to increase the reach of LPG specially in rural areas, a dedicated Scheme namely Rajiv Gandhi Gramin LPG Vitrak Yojna was launched in October, 2009. This will benefit the rural population to have access to the convenient cooking fuel at their doorstep on the one hand and help local inhabitants particularly youth and women to get the dealerships.

Government allotted dealerships of petroleum products to 18 families of the martyrs of the Mumbai Terror Attack early this year. Majority of the dealerships have already been commissioned/handed over within a year of the allotment. As part of its community welfare measures additional quantity of kerosene was released to the cyclone affected areas of West Bengal in June 2009. A decision was also taken in February 2009 to enhance the Corporate Social Responsibility (CSR) funds of the oil PSUs to at least 2% of net profit of previous year making available a fund of about Rs.600 crore annually for this important programme of community development/welfare.

Important international meets like Petrotech 2009 and India Africa Hydrocarbon Conference etc. were organized successfully under the aegis of the Ministry of Petroleum & Natural Gas to put India of firm footing globally.

Thus the year 2009 has been marked by a number of initiatives focusing on accelerating exploration and production, developing oil & gas sector infrastructure, increasing reach of right quality & quantity of petroleum products, besides undertaking important community service/welfare measures.

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