Oil companies will have to work at present crude prices: Oil Secretary

New Delhi | Updated on October 28, 2020

Upstream oil exploration and production companies in India will have to figure out how to work at the present prices of crude oil, according to Petroleum Secretary Tarun Kapoor.

Speaking to journalists at the India Energy Forum by CERAWeek, he said: “There was a demand from various upstream companies to reduce cess and royalty. All companies would want their taxes to be reduced, but it is up to the government to take a decision based on the overall resource requirement and various other impacts which tax reductions and increases have. In the meantime, we are trying to support the upstream industry in other ways also.”

Kapoor was responding to a question on the status of requests from upstream companies regarding waivers of levies on oil and gas exploration.

“The demands were made when crude oil prices had gone in the range of $20 a barrel; now, it is in the range of $40 a barrel or a little above. The stress that was being felt at that point of time has, maybe, changed now. Then, I suppose, upstream companies have to now work at these prices,” he said.

“It’s not just a little bit tax here or tax there, which is going to make a difference. In the long run, the upstream companies would probably have to adjust with what the market is going to be in the future,” he added.

The dampened sentiment has reflected in auction of oil and gas blocks being conducted by the government. Most blocks on auction in recent rounds have been cornered by PSUs in the absence of private participation. Kapoor said he is hopeful of better participation of private sector players in the next round of bids for auction of oil and gas blocks.

Responding to a query on the status of Bharat Petroleum Corporation Limited privatisation, Kapoor said: “We want the BPCL disinvestment to happen as soon as possible, but this subject is not handled by the Petroleum Ministry. It is being conducted through an independent and transparent bidding process.”

Published on October 28, 2020

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