Riding on the success of the Pradhan Mantri Ujjwala Yojana (PMUY), Minister for Petroleum & Natural Gas and Steel, Dharmendra Pradhan, has chalked out an aggressive target for himself in the upstream (exploration and production of hydrocarbons) and mid-stream (pipeline infrastructure) segments of the oil and gas industry. While the proposed strategic sale of Bharat Petroleum Corporation under his Ministry is in the news, Pradhan, in an interview with BusinessLine, made it clear that his role is that of a facilitator.. He is confident that through the successfully completed bidding rounds in the upstream segment, the energy sector will garner $58-billion investments by 2023 and an investment of about $60 billion in building gas pipelines, terminals and city gas infrastructure that are in different stages of implementation. Excerpts:
Expectations are high after Prime Minister Narendra Modi recently met the energy sector top honchos of the US firms investing here. How do you see it?
After Petronet LNG signed a non-binding MoU with Tellurian Inc at Houston, USA, there are other big outcomes of the Prime Minister’s interaction with the CEOs there and the Howdy Modi event In the last five years we have been constantly persuading Exxon and other such big companies to come to our market. Now they are convinced. Exxon, for example, has entered into two MoUs — one each with Indian Oil Corporation and ONGC.
Exxon is one of the pioneers in LNG business in the world. It is interested in exploring the same in India and has signed a non-binding MoU with Indian Oil to initiate discussions. Simultaneously, it has engaged with ONGC to explore the possibility of exploration and production industry in India.
At CERAWeek, Bob Dudley, Group Chief Executive, BP plc, said there is plenty of resources available in India — close to 100 trillion cubic feet of natural gas resources — and that BP is here to stay for a longer period of time. That is the confidence the global companies have now.
Starting from small companies to oil majors all have realised that this is the time to look at India. There is a demand in India and the next two-three decades highest growth will be here. Besides, the recent reduction in corporate tax will also enthuse them.
Is India moving away from its traditional partners and tilting towards the US for its energy needs, which will not be cheaper?
We cannot be in isolation in world affairs. Domestic interest is paramount to us and when the Prime Minister talks about energy justice then affordability is the key factor. Nowhere we are purchasing the commodity at high prices, we are purchasing from anybody and anywhere in a very competitive and transparent way.
With the Exxons of the world looking at India how do you think the future prospects will be?
The earlier data we had was based on old repository and seemed to be very conservative. Now two things have happened. First, in the last three-four years we have given much emphasis on data management. We have developed the National Data Repository, given Open Access, done new seismic data collection, new method of computing and digitisation has been adopted. Therefore, today, the same sets of data are showing new probability.
Second, this is a hardcore economic issue. Where there is demand and where there is a probability investment will come. India is a fit case.
A key factor in the energy sector is affordable pricing. You have been raising it at the OPEC level as well. What is the sense you are getting now on pricing?
Despite the incidents that have happened in the last 30 days — attack on Aramco installation and incident in the Strait of Hormuz — there is stability in price. There are challenges, there is anxiety, but in reality the physical price is hovering around $58-64 a barrel. I strongly believe this has happened as the buyers’ choice is impacting the new normalcy in the exploration and production industry of the world and that leads to rational price mechanism.
This apart, innovation, technology and alternative energy have all worked. Just see the mood of the world — consensus on decarbonisation of the economy. Terms like climate emergencies are emerging. We are not the polluting country, some of the OECD countries are the major pollutants.
The Government is pushing for a gas-based economy. You have been talking about having a gas exchange here – creating a trading hub. What is the status?
I am confident that by next year, the hub will come up automatically. Due to our policy reforms we are investing more in pipelines, supporting and encouraging setting up of more LNG terminals and 70 per cent of the population will be covered with piped gas network. Then there is a huge initiative in compressed biogas. Besides these, reforms in exploration and production industry give me confidence that in the next five years domestic gas production will be substantial.
Also Coal Bed Methane will show more results, and then there will be coal based synthetic gas. So there will be different sources of gas — natural gas, gas from biomass, CBM, LNG and synthetic gas — coming at varied prices. Automatically they all will blend and an exchange is a natural requirement for this.
Since we are talking of gas infrastructure, questions have also been raised on monopoly of GAIL (India). Do you agree with this perception?
No, I don’t see monopoly of any company. I am personally monitoring GAIL. Such complaints were there once. See GAIL has three roles today — it is essentially an infrastructure company of gas pipelines, a marketing company and a petrochemical company. Here the allegation on GAIL was that they are a monopoly – now they were a monopoly because they were pushing the consumers to use their gas for allowing access to their network. Now, this is no more the case, as pipeline vertical is different and transparent – anybody can use it anytime and use their own gas.
Besides, GAIL is no more the only pipeline company. Others are coming through the bidding process. But still we need to have a more transparent mechanism, so we have advised GAIL to bifurcate and create a new separate business — an infrastructure company. The GAIL board may take its own appropriate decision, but as a policy in-charge our advice to GAIL is to go for a separate, independent, transparent pipeline company, while continuing to do marketing.
Ujjwala has now matured, stabilised. What more is in the offing?
I think we are moving towards saturation here. When we started, 55 per cent was our LPG penetration, now it is more than 95 per cent. Quality and affordability of LPG is the priority now.
If we can convince the society to use clean cooking fuel and talk about the health and economic benefits and how it helps in empowering women, these are the areas of priority for our government now.