Despite low crude oil prices, global companies in exploration and production are keen to tap the opportunities in India, the “happening spot” for investments, Dharmendra Pradhan, Minister for State (Independent Charge) for Petroleum and Natural Gas, said.

Investor interest was apparent at a recent road show he had attended in the US ahead of the planned bidding for some of the small discovered fields. At $45-50 a barrel, oil prices are not lucrative for companies in exploration and production but “nobody wants to miss the bus in India,” he said.

He said the government was keen on attracting investments across the entire gamut of oil and gas sector.

Responding to a question from BusinessLine ’s Editor R Srinivasan on the change in policy environment in the oil sector, the Minister said it is important that India draws investments and also invests globally to enhance production. In the coming years, India will be the largest energy consumer globally. It is now the third after the US and China.

Affordable energy Policies have to be made to attract investments to increase production in the oil and gas sector even while keeping energy prices at an affordable level for the citizens.

When the present NDA government had taken over, it had put in place a pragmatic policy which helped bring down gas price to about $3 mmbtu from about $4-8 mmbtu under the previous government. The policy also provides for price revision twice a year.

And as assured in October 2014, it has allowed market-driven pricing for gas from challenging areas such as the K-G Basin. So far, Mumbai High was the main domestic source and fuel is tapped from shallow waters. But in the K-G Basin it has to be tapped from 200 m to 2000 m under sea.

The government has also learned from its 25 years of experience in oil-fields bidding to revamp the policies. One fundamental change, Pradhan said, is the shift away from profit sharing to a revenue sharing model. This did away with the government micromanaging the business and disputes, while protecting public interest.

Simplified licensing Market- driven pricing has been allowed and licensing simplified. With a single licence, investors are allowed to monetise oil, gas, coal-bed methane, or whatever resources they find. Previously, an oil licence meant that the investor cannot tap any other gas find. The government is also increasing competition in marketing by inviting multinational companies in addition to the domestic oil companies, he said.

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