However, Centre has been giving a major thrust on searching for fresh hydrocarbon reserves in onshore and offshore blocks in India. The industry too has undergone major transformation in the past few years. From deficit situation till 1999-2000, the country is now net exporter of petroleum products. 100% FDI is allowed in the exploration of crude oil and natural gas through the automatic route.
Even as the launch of new exploration licensing policy (Nelp) since 1997-98 is a major initiative for private investors and public companies to diversify and integrate their operations, foreign players are still not coming forward for want of tax sops and profit. By opening the market to international companies, the government is hoping to capitalise on their expertise and investment to accelerate hydrocarbon exploration in India. Some 200 blocks have been awarded in Nelp I to VII. The countrys currently known oil and gas reserves will be exhausted in 23 years and 38 years respectively at current production levels. Ironically, there are no major discoveries after the discovery of Bombay High in 1970s.
The exploration has not resulted in any significant new oil find, while large gas finds have been reported though uncertainty still prevails with respect to precise gas availability. Around 70% of Indias natural gas reserves have so far been found in the Bombay High basin and Gujarat. The discovery of gas in the KG D6 fields by Reliance Industries, by the GSPC and by the Cairn Energy are noteworthy.
Since the launch of Nelp in 1997, India has had a fair success rate. In the first six rounds (the seventh concluded only last month), almost 50 discoveries have been made, increasing the hydrocarbon reserves pile by over 600 million tonne. The gigantic KG basin discovery is the fruit of Nelp and so is the series of onland oil discoveries in Rajasthan.
On the other hand, ONGC Videsh Ltd (OVL), IOC and GAIL India are engaged in the acquisition of overseas E&P assets. OIL-IOC combine has an exploration block in Libya apart from being OVL partners. OVL has signed MoU with the Mittal Group for leveraging their presence in hydrocarbon rich countries.
The empowered group of ministers (EGoM) approval of price of natural gas price of $4.20 per million British thermal unit (mmBtu) for Nelp I to VI contracts was a pathbreaking decision. The implementation of the gas price still largely depends on the Bombay High Court which is currently hearing two separate cases involving RIL and NTPC and RIl and RNRL. Moreover, according to the EGoMs decision on commercial utilisation of natural gas produced under Nelp, of the first 40 million cubc meters per day (mmscmd) from RILs KG D6 fields, existing gas based urea plants will get a priority followed by existing gas based LPG plants and existing gas based power plants lying idle/underutilised are likely to be commissioned by the end of current fiscal.
Similarly, the dismantling of administered price mechanism of petrol, diesel, LPG, SKO and ATF from 2002 was quite crucial. However, a fixed amount of subsidy continues on LPG for domestic use and SKO for public distribution system.
Ironically, the oil companies continue to lose Rs 17.26 per litre on PDS kerosene and Rs 148.38 per domestic LPG cylinder. The centre has already rejected the recommendations made by a committee chaired by former cabinet secretary BK Chaturvedi on financial position of oil companies. The committee had suggested the introduction of windfall tax, special oil tax and graduated price adjustment for automotive fuels. Moreover, the Centres much debated enthanol blending programme, which was aimed to reduce reliance on crude, has hit roadblocks. State taxes and disagreement between the oil marketing companies and ethanol producers has forced the Centre to defer the rise in ethanol blending to 10% from 5%.
As far as the implementation of Indian Pakistan Iran pipeline, Turkmenistan Afghanistan Pakistan and India (TAPI) are concerned, these projects are progressing slowly in view of present tenstions between India and Pakistan and non-settlement of tax and cess reissues.