Interview with Mr. R S Pandey, Secretary, Ministry of Petroleum and Natural gas

By: Anjum.A.Zaidi

How was the response at the recent NELP road show in Mumbai and where do we go from here?

NELP 8th round road show was certainly an important event  Despite apprehensions of economic slowdown in the economy there were anxiety, but we got very good response in the  Road Show.

More than 100 Companies participated, around 500 persons registered themselves. In particular, foreign companies made excellent presentations in this event. Companies like British Gas, Cairns Energy mentioned in their presentation that they find India to be very good Investment Destination in oil and gas sector. British Gas made public presentation and they shared their India Experience. It was a public statement wherein they publicly stated that they are happy to be present in India in the vibrant gas sector.

Any new discoveries?

In the last 10 years there have been over 100 new discoveries. 72 of them have been under NELP and balance under pre NELP or Nomination Blocks. Discovery alone is not enough because it has to be converted into viable commercial venture and after that it has to be put into production. However, production blocks are only a few.  From the NELP round,  KG Basin is the first block which has gone on production mode in a major way and this year KG Basin production results have confirmed India’s prospectivity. KG Basin is the major discovery after the Bombay High and it has given major boost in our endeavour. Alongside KG Basin Gas discovery, in the Western Part of India in “Barmer” district, Cairns Energy’s is another major discovery. It is not a NELP Block, rather a pre-NELP Block. As per the initial information received so far, it is being estimated that this block has the potential to produce about 25% of what is being produced in India currently. It is very encouraging that a small district in Rajasthan, which was known as unproductive district because it is desert all over, is going to produce 25% or 1/4th of India’s Crude Oil. As in the East – in the Deep Sea, in the West – Onshore production is going to start very shortly. These two has been the major events which will definitely establish the reserves and production capability of India.

In fact one of the major attribute of success of Road Show is success of these two blocks.  It has made long lasting impression in the mind of the foreign investors. We know for fact that huge reserves are there in Gujarat, Rajasthan, Bombay High, Konkan Cost, Bay of Bengal but it has to found and established. This time we have put blocks in Andamans High Seas as well for bidding. Ministry is very confident of the prospects and there is no doubt on this fact.

Put together all these facts, country will attract huge investments in this sector. As a matter of record, India has received investment of over US$12 Billion in last 10 years up to the 7th round bidding of NELP Blocks.

How far have the ministry progressed on National Gas Highways?

Concept Paper on National Gas highway is in process and at this point of time it is open ended. It is a major policy decision for this ministry because of the potential it offers and for that reason it is one of the thrust areas. Ultimately, a proper scheme would be in place which will take several years to take shape but once the concept is prepared and finalized, it will be a departure from what the ministry is doing now.

How are you looking at the energy security of India and what steps initiated?

A Focus is on both Gas & Oil discoveries. India consumes 1/3rd of what the world consumes, 1/7th of what USA consumes in terms of per capita consumption. But as per the estimates available with the ministry, while the world’s energy requirement will grow @ 1.6%, India’s energy requirement will grow @ 3.2% per annum by 2030. In other words, pace of growth is going to be double of average growth of the world in next 20 years by 2030. Therefore, we require more and more energy to maintain the growth.

Currently, India’s 41% energy requirement is met through Oil & Gas and balance is met through Coal but share of Oil & Gas has been increasing and would so be in future as well.  For Oil and Gas Energy, the country is dependent on outside world. We are importing 28% of our requirement for Gas from overseas countries. (This does not include the supplies from Reliance KG Basin because the supplies have started very recently). For Oil, country is importing 75% of its requirement for domestic consumption. This figure goes up to the level of 84% if requirement of Refineries for Exports is also considered together – Year 2008-09. In 2007-08 it was 83% and in 2006-07 it was 81%. It means it is growing constantly over the period.

We have established sizeable capacities for refining in India and for this reason we have to ensure supplies of Crude for these refineries for domestic as well export consumption.

What about equity holding in oil fields and oil producing companies abroad?

Our dependence on the outside world for crude supplies is very high and for this reason we have augmented measures for discoveries and production of Crude within India to reduce the dependence on outside world to the best possible extent. NELP bidding is aimed only for this purpose. This time we have invited bidding for CBM as well which would be 4th round. We have called bidding for 10 Blocks of Coal Bed Methane Gas; we are trying to improve the access to Equity Oil & Gas abroad. This is the second part of the strategy for energy Security.

It has been a good performance in last 8-9 years when we have acquired a large number of blocks abroad. We are currently present in 20 countries in the world. Last year, we produced 14% India’s domestic production in our own Assets abroad in Oil and Gas equivalent. Our focus to acquire blocks abroad is still continuing.

Last we acquired “Imperial Energy” which has assets in Russia and the company was Head Quartered in London. Similarly Indian Oil Companies are scouting for the opportunities world over and wherever they get viable commercial options, they are grabbing the opportunity.

You have recently visited Turkmenistan? And there were talks of International gas grid?

We are working in Turkmenistan as well. Gas Authority is trying to work on building Gas Pipeline in Turkmenistan and we enjoy very good diplomatic relations with the country. There are some Gas fields where we would like to establish our stakes as well. We made presentation in International Gas Conference in Turkmenistan where we made suggestions / presentation of having “International Gas Grid”. We proposed that if “International Community” comes forward to finance this International Gas Grid, it will bring Consumers and Producers closer. This will reduce the chances of disruption of assets because the assets would then be owned by International Community instead of any Individual Country. However, this is a gigantic task.  In fact, we took the clue of creating “National Gas Grid” out of this discussion in the conference. Now, we are working on National Gas Grid.

On Conservation

Our strategy is in the area of Conservation by improving efficiency, meaning consuming less for the same amount of output by increased efficiency and using better technologies and increasing the awareness level of consumers and by taking fiscal measures. Our mission and vision is to reduce the consumption for the same amount of output by all these measures and initiatives.

There has been thrust on Energy Diplomacy in the past?

Emphasis was laid on both exploration and production of Crude Oil and Gas & Energy Diplomacy in the ruling party manifesto and in the President’s Addresses

In a situation where country is dependent on outside world to the extent of over 80% for its energy requirement, importance of Energy Diplomacy becomes all the more and there is requirement for promotion of this Diplomacy to ensure Energy Security for the country. In Petroleum Ministry, there is a separate Division for this purpose. All our Embassies are working in this direction and Petroleum Ministry is maintaining regular interaction with Embassies abroad and these efforts need to be further strengthened. In the Ministry of External Affairs, there is an officer of the rank of Additional Secretary designated as Additional Secretary for Energy Security. These measures will help to develop and carry the initiative further in long term.

This year we will organize a Conference of African Countries, which was preceded by Conference of CIS Countries and all these conferences help to find ways and means of promoting common interest.

We have discussed on subjects like developing storage facility in India where suppliers can store surplus oil for further export.

Gulf countries are our major suppliers and we are their major buyers and therefore if such initiatives are taken by them, it will stand to benefit both the parties. It’s a “WIN WIN” situation for both. It adds to our Energy Security and for them there is an assured market. Therefore, we tried to build mutuality of interest and for this purpose we have formulated a policy. Initial response has been very good though detailed work has to be done and modalities need to be thrashed out. This concept is of recent origin and we have started working in the direction with utmost sincerity. It helps both.

Our submission was that we are a major consumer and we are also enroute to Far East Countries, which are major customers for Crude Oil & Gas dependent on Gulf & Middle East Countries. Therefore, India offers an excellent destination for storage.

What are the main focus areas of the ministry?

I can count for you.  Currently there are 6 focus areas we are concentrating on.

A. Renewed focus on exploration and production in accelerated manner.  The focus has to shift from only reserve accretion.

B. Increased thrust has been given on acquiring more and more Equity Oil & Gas abroad.

C. We have given a great emphasis on Enhancing Consumer satisfaction.

This is a sector which has huge interface of customers with the ministry because there would hardly be a single consumer who is not consuming Oil or Gas in direct or indirect form. The poor use Kerosene and the rich use Jet Fuel but the fact remains that all are dependent on this commodity day in day out and for this reason delivery mechanism has to improve. For example, delivery mechanism of LPG and City Gas needs to be improved substantially. And we have taken concrete steps.  After the New Government, we have come out with Vision 2015. This scheme, named as, “Rajiv Gandhi Gramin LPG Vitrak Yojna” has been finalized only this month on 6th and would be rolled out nationally very shortly. Necessary instructions have been given to Oil Marketing Companies and they will come out with advertisement for appointment of at least 1000 Gramin Vitraks in this month itself.

D. We have given emphasis on Conservation.

The idea is to consume less for the same amount of output. Economy is growing and therefore output has to increase and for that reason consumption has to grow but we need to increase the efficiencies. Efficiency can be improved by introducing new technologies and efficiencies of the equipments. This requires Education & Training and lastly Fiscal Measures are also required. In the recent past, we had launched Media Campaign for education and training after evaluation results were found to be astounding and encouraging.

E.  Research and Development

Adoption of new technology in areas like Coal Bed Methane, Gasification of Coal Mines, Shale Gas, Gas Hydrates, and Hydrogen etc., is a futuristic approach. We have formed new Research Group for this mission which will guide us in future in these new initiatives. We may not build new Institutes.  Rather, we will try and coordinate with existing institutes of Oil & Gas for this purpose. We have signed agreement with USA on Gas Hydrates.

F.  Renewables – Ethanol, Biodiesel.  

Ethanol – We have been able to attain level of 5% blending only so far and the practice is not uniform across the country due to supply constraints. Ethanol production is limited and then there is requirement by Chemical Industry as well. We are taking suitable steps in this direction.

Thrust in these areas has been given in the last few years. Ministry of Renewable Energy is however doing great work in this direction