Comments
India does not offer a stable policy regime for oil exploration companies, said P.M. S. Prasad, Executive Director and Member of the Board of Reliance Industries Ltd, on Tuesday. Prasad was addressing media-persons on the sidelines of the 3rd National Conference on Energy Security, organised by FICCI.
“We do not have a stable policy regime, which is very essential for any investor to come and invest, either in technology or to put in a bid for exploration,” he said.
“There is a continuous erosion of the existing regime – New Exploration Licensing Policy – by taking away several of the rights that were given under the policy. Not honouring the production sharing contract (PSC) is the worst thing that can happen,” said Prasad.
Differences over PSC
Currently, RIL is in arbitration with the Ministry of Petroleum and Natural Gas on matters related to its PSC. The Ministry had threatened to disallow some of the expenditure incurred by the company. This was in the wake of a sharp decline in gas output from the D6 block in the Krishna Godavari basin.
Asked if RIL would agree if the Government doesn’t allow the explorer to increase the price of gas until it fulfils previous commitments, Prasad said: “I do not know if that is true. If it is, then we have a problem. We clearly say this is a violation of PSC.”
Recently, oil regulator, Directorate General of Hydrocarbons (DGH), recommended that an additional penalty be levied on RIL for not producing gas at the expected levels . “We have not been informed of any additional penalty. We are already in arbitration because this is not in line with PSC,” Prasad said.
Venezuela plans
Prasad blamed the policy regime for the exit of many foreign companies, such as British Gas, Shell, StatOil, BHP and Petrobras, that had ventured into India.
“If you see India, so many foreign companies came. They all left. One strong reason is the issue of prospecting in Indian basins. You have to compensate that by giving an attractive fiscal regime,” he added.
RIL itself is looking to venture overseas, evaluating opportunities in Venezuela. “We are looking at two things from Venezuela. First, we have a long-term supply contract and we are looking at enhancing the quantity under that contract, possibly from next year. Second, we are looking at investing in Venezuela,” he said.
RIL already has an umbrella memorandum of understanding signed with a Venezuelan company. Currently, RIL imports more than 300,000 barrels per day. Prasad said that the energy-rich country has given two-three upstream projects, which may be coupled with some downstream options. “In the next few months, we will have to complete our evaluation,” he added.
Talking about other markets where RIL would scout for opportunities, Prasad said Mexico, Iraq, the US, Canada and Myanmar are attractive destinations.
He also indicated that RIL may partner with a Government-owned company for overseas projects.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.