PM says there is enough production but unique marketing features in oil sector pushing prices up

New Delhi, Oct 15: Prime Minister Narendra Modi has expressed his opinion in the meeting with CEOs and experts from oil and gas sector from India and abroad that oil market is producer driven and both the quantity and prices are determined by the oil producing countries with a unique feature. He was taking stock of the situation of international oil pricing in view of skyrocketing oil prices in India.

The government said that during the interaction with the PM global CEOs and experts appreciated steps taken by the government of India over the last four years, for ease of doing business, and specifically in the energy sector. Experts have made a special mention of India's competitive ranking from the upstream investment point of view which has gone up from 56 to 44.

Subjects such as expansion of oil and gas infrastructure in India; enhancing exploration and production; potential in solar energy and bio-fuels; and Indian government's holistic approach to the energy sector has been discussed. They appreciated this kind of initiative of the government, which brings various stakeholders together on policy matters.

Interacting with the global leaders of the energy sector, Prime Minister Modi highlighted the significant positioning of India in the oil and gas market. He noted that the oil market is producer driven; and both the quantity and prices are determined by the oil producing countries. The PM said that though there is enough production, but the unique features of marketing in the oil sector have pushed up the oil prices. Modi has made a strong case for a partnership between the producers and consumers in the oil market, as it exists in other markets. This will help stabilising global economy which is on path of recovery.

The PM drew attention of experts on certain key policy issues relevant to India: First he highlighted that due to rising crude oil prices the consuming countries face many other economic challenges including serious resource crunch. Cooperation of the oil producing countries would be very critical to bridge this gap. He appealed to oil producing countries to channel their investible surplus to pursue commercial exploitation in oil sector in the developing countries; Second, he spoke of higher acreage under exploration and sought cooperation of the developed countries both in terms of technology and extension of coverage; thirdly he sought the role of private participation in the distribution of gas sector. Talking about technology, he appealed for assistance in areas where high pressure and high temperature technology applications are relevant to commercial exploitation of natural gas; and last and the most important he requested for review of payment terms so as to provide temporary relief to the local currency.

The PM also spoke about the various policy initiatives and developmental measures undertaken by his government in the sector. He highlighted the liberalisation in gas pricing and marketing which has been particularly in deep waters and requiring technology for high pressure high temperature exploitation. He made a mention of open acreage licensing policy, early monetisation of coal bed methane, incentives for discovery of small fields and seismic survey at a national level. Talking of ongoing commercial exploitation, he made a special mention of extension of production sharing contracts.

The meeting was attended by ministers from Saudi Arabia and UAE and CEOs and experts from organisations including Saudi ARAMCO, ADNOC, BP, Rosneft, IHS Markit, Pioneer Natural Resources Company, Emerson Electric Company, Tellurian, Mubadala Investment Company, Schlumberger Ltd., Wood Mackenzie, World Bank, International Energy Agency (IEA), NIPFP, Brookings India and various Indian companies involved in both upstream and downstream operations. Besides these companies and government official Union ministers Arun Jaitley and Dharmendra Pradhan; Vice-Chairman NITI Aayog Rajiv Kumar and senior officials from the Union Government and NITI Aayog also attended the meeting.