The Hindu Business Line : Plan to invest $1 b yearly in oil, gas fields abroad

THE country plans to invest around $1 billion annually on acquisition of overseas oil and gas fields, according to the Petroleum Secretary, Mr B.K. Chaturvedi. Speaking today at a seminar organised by the Confederation of Indian Industry (CII), Mr Chaturvedi said that this move would help reduce Indian's dependence on imported crude, which is currently at 70 per cent of the domestic demand.

"We have already invested about $3 billion in taking stake in oil and gas fields in nine countries. Further $1 billion per annum will be invested till 2015," he said.

ONGC Videsh Ltd has already taken an equity stake in an oil field in Sudan, which is yielding 3 million tonnes of crude oil annually to India. Besides, a 20 per cent stake in Sakhalin field in Russia will give 5 million tonnes from 2005 and an equal quantity would be received in exchange of 50 per cent in an Angola block, he said.

Besides, OVL has also picked stakes in oil fields in Syria, Libya, Sudan, Iran, Iraq, Vietnam and Myanmar.

"Cost of crude oil production from these fields may be $6-7 a barrel against the prevailing international price of $41.5 a barrel," he said.

Mr Chaturvedi warned that an increase in oil prices will have a ripple effect on the economy and will drastically reduce India's ability to invest and grow.

"Increase in prices will have cascading effect on the economy, thereby affecting GDP.

A $10 per barrel increase in crude oil price will dent the GDP by 0.5 per cent. A $10 increase would result in $7.5 billion outgo," he said.

Quoting US Federal Reserve Chairman, Mr Alan Greenspan, he said,

"The world has entered an era of permanently higher crude oil and natural gas prices."

According to Mr Chaturvedi, duties on import of crude oil and excise and sales tax should be brought down to contain the effect of high international crude oil prices.