New Delhi, Sep 9: With global oil prices halving, India should aggressively scout for acquisition of oil and gas assets abroad, create strategic reserves and step up domestic exploration, Oil Minister Dharmendra Pradhan said today.
Opportunities emerging from low oil prices were discussed at a meeting called by Prime Minister Narendra Modi with business leaders, bankers and bureaucrats yesterday against the backdrop of global economic turmoil, he said.
Aggressive overseas acquisitions, building strategic oil reserves, stepping up domestic exploration and tying up supplies on favourable terms were some of the suggestions that came up at the meeting, Pradhan told PTI.
India, which is 80 per cent dependent on imports to meet its oil needs, is a direct beneficiary of oil prices slumping from USD 115 per barrel to under USD 50 in last one year. Besides cutting its oil import bill, lower oil prices have also helped cool inflation and cut government's subsidy bill.
"It was felt at the meeting that low oil prices present an opportunity which India must capitalise on," he said.
Participants at the meeting suggested that India aggressively buy oil and gas fields abroad as low oil prices has not just brought down valuation of assets but also led to distress in some others that had borrowed huge funds when oil rates were high.
State-owned Oil and Natural Gas Corp (ONGC) last week agreed to buy 15 per cent stake in Russia's second biggest oil field of Vankor from Rosneft for USD 1.268 billion as Moscow looked to cut risks in low oil price regime.
Pradhan said participants also felt that India should use the low oil prices to stockpile oil at near complete underground strategic storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka.
Also the capacity should be raised from 5.33 million tons to guard against crude price shocks and supply disruption. India, world's fourth largest oil consumer, should also tie-up supplies from producers in Middle-East, Africa and Latin America on favourable terms, he said.
Low oil prices have also led to slump in cost of associated services like drilling rigs, which should be taken advantage of for increasing domestic exploration and production (E&P) activities, he said adding more wells should be drilled to find new reserves.
"We received constructive suggestions, which the government is working on," Pradhan said.
Modi at yesterday's meeting urged Indian industry to take risks and make investments for the good of the nation. The meeting took place amid China's slowdown threatening to drag down global growth and investor concerns over the possibility of the US Fed raising interest rates.
Indian stocks and currency are among the worst hit in Asia since China devalued the yuan last month. India, which had in January-March overtaken China to become the world's fastest-growing major economy, saw its GDP slow to 7 per cent in the April-June quarter.
The growth rate puts it on par with China as the world's fastest-growing major economy. Modi had last year set a target of cutting India's oil import dependence by 10 per cent to 67 per cent by 2022.
The target was set keeping in mind the 77 per cent import reliance in 2013-14. Import dependence has since risen to 80 per cent.
For cutting import dependence, experts suggested boosting E&P activity, removing discrepancies in taxes and duties, streamlining the approval and clearance process, building gas pipeline infrastructure, a road map for transition to market-determined gas pricing and strengthening state-owned enterprises.
Reliance Industries Chairman Mukesh Ambani, Tata Group head Cyrus P Mistry, Aditya Birla Group head Kumar Mangalam Birla, Sunil Bharti Mittal of Bharti Airtel and ITC chief YC Deveshwar were among the industry leaders who attended the meeting at Prime Minister's residence yesterday to brainstorm on various issues and opportunities arising out of global economic challenges.
Besides Pradhan, Finance Minister Arun Jaitley, Reserve Bank Governor Raghuram Rajan, Road Transport and Highway Minister Nitin Gadkari and Power Minister Piyush Goyal joined the over three-hour long brainstorming.
State-owned gas utility GAIL India Chairman BC Tripathi and BHEL chief B Prasad Rao too were among those present at the meeting.
Government officials present the meeting included Finance Secretary Ratan P Watal, Commerce Secretary Rita Teaotia, Economic Affairs Secretary Shaktikanta Das and Chief Economic Advisor Arvind Subramanian as well as Niti Aayog vice chairman Arvind Panagriya.