"Our approach is simple - Diversify Sourcing"
Petroleum and natural gas Minister Dharmendra Pradhan, in an email interview with Anilesh S. Mahajan, explains India's energy diplomacy, strategy for renewable energy, new policies for attracting capital and attempt to unshackle the public sector oil giants. Edited Excerpts
Prime Minister Narendra Modi has set an ambitious target of reducing hydrocarbon imports. What is the progress??
A: To reduce hydrocarbon imports, we pushed for increase in domestic production of oil & gas, promotion of bio-fuel and renewables, conservation and demand substitution and improving refining capacity. The Hydrocarbon Exploration and Licensing Policy, Open Acreage Licensing Policy and Discovered Small Field Policy, along with liberalisation of the regime for mining unconventional hydrocarbon resources with a single licence and marketing freedom are all aimed at enhancing production. Apart from this, the cost recovery-based system will be replaced by an easy-to-administer revenue-sharing model.
What is your experience of using diplomacy to ensure energy security?
A: Our approach towards energy diplomacy is simple - diversify sourcing; bargain for better terms; find new markets; collaborate with countries that are similarly placed; and seek investments. We stepped up government-to-government dialogue and engaged with colleagues at external affairs ministry and Indian missions to become active stakeholders in ensuring energy security. We regularly talk to global energy majors, visit leading universities to meet experts and are backing our companies to up their game internationally.
The result is satisfying. We are now sourcing crude oil and LNG from the US, have got investments from Abu Dhabi National Oil Company in strategic reserves, and acquisition of equity in fields in Russia, the UAE & Oman. Hydrocarbons find prominent mention in the prime ministers engagement with his foreign counterparts, and he played a proactive role in revision of price of Qatar LNG and acquisition of equity in the UAE.
How are you planning to diversify oil sources further?
A: In October, Indian Oil's Paradip refinery received the first-ever consignment of US crude oil. BPCL, HPCL and MRPL have also started importing crude oil from the US. Rosneft and partners now have a say in Essar Oil, so we could see a lot more Russian crude oil getting processed at Vadinar. There is also a possibility of more purchases from Africa, Latin America, and some Caribbean countries. Also, time has come for Indian refiners, especially public sector players, to look at structural/commercial part of the sourcing deal. So, the freedom that Reliance and Essar Oil have for sourcing must be available to public sector refiners too. For LNG, we have already got our first cargo from the US. Australia and Russia will soon join the list.
What is your view about the future of oil, especially when India, along with other nations, is actively looking at electric vehicles and energy storage devices.
A: Oil will continue to occupy the centre stage in the foreseeable future. While renewables and electric vehicles will grow, I don't see electric vehicles getting mainstreamed in the short to medium term.
What more should be done to enhance domestic production?
A: Last week, I spent a day in the KG Basin during which I reviewed the deep-sea drilling of ONGC and also got a briefing about the upcoming RIL-BP investment in eastern offshore. I see possibility of a huge increase in domestic gas production.
The government is soon coming up with an Enhanced Oil Recovery (IOR) policy to extract more from depleting fields. Most of India's producing fields are ageing and can use EOR methods to boost output. We are also working with leading universities to enhance production. Oil India has signed an MoU with the University of Houston to augment reserves and maximise recovery from ageing fields in Assam. ONGC has signed a MoU with Indian Institute of Science for development of an alternative to hydraulic fracturing that is used to produce shale oil and gas. We have promoted Coal Bed Methane by giving the producers price and market freedom.
What is the outcome of the 16th International Energy Forum?
A: The IEF ministerial meeting was a success. It saw participation from 53 countries of which 38 were at the ministerial level, over 17 international organisations and over 24 top-notch CEOs, including from several Fortune 500 companies. Over 1,345 delegates participated, including 638 overseas ones. In addition to the broad agenda, there were over 175 government-to-government and business-to-business meetings.
The concrete outcome was an MoU with Saudi Aramco for the $44 billion refinery cum petrochemical complex in Ratnagiri. This will be the biggest FDI in any single project.
India is expected to increase the composition of gas in energy basket from 7% to 15%. Can you help us understand the plan?
A: India consumes approximately 140 MMSCMD gas, equally split between domestic and imported LNG. We are rapidly expanding natural gas and LNG infrastructure to promote city gas (CGD) networks.
The Pradhan Mantri Urja Ganga project to connect eastern and north eastern regions with gas pipeline is on. The gas trading exchange will be ready by the end of the year. A multi-pronged approach is being taken to boost gas. The entire country will be connected with a National Gas Grid and nearly half of the districts via city gas networks.
Eight cross-country pipeline projects are stuck or shelved. How do you plan to revive them?
A: This is a concern. The PNGRB recently cancelled the authorisation of GAIL for the Surat-Paradip pipeline. We asked it for a review. But there are green shoots too. The Jagdishpur-Haldia and Bokaro-Dhamra pipeline, the Guwahati-Barauni pipeline and the JV for the North Eastern Grid connecting all northeastern capitals happening.
