Ex-Shell chief tells India to exploit cheap oil

Vol 19, PW 12 (25 Feb 16) People & Policy

When Vikram Singh Mehta speaks people listen.

And so it was on February 15 before a packed audience of more than 700 people at the Pandit Deendayal Petroleum University in Gandhinagar when the former Shell India chief said plummeting oil prices present India with a golden opportunity to strike long-term deals with the world's oil producing nations. Mehta, who was Shell India chairman from 1994 to 2012 and is today executive chairman of think-tank Brookings India, said the Indian economy is stagnating and that things would have been worse if the plummeting oil price had not reduced its oil import bill.

Mehta said now is an excellent time for India to improve relationships with countries like Iran. "India can help Iran set up its oil infrastructure," he said.

"India should also acquire stranded assets from companies facing bankruptcy because of the falling oil price. This is a chance to leverage the economic scenario for the long-term.

" Mehta added that India can no longer expect major players like his former company Shell or Exxon or BP to invest in exploration given the prevailing gloom. He said global exploration expenditure ($90bn in 2014) would fall to $40bn in 2016.

Of 58 mergers and acquisitions worldwide between 2013 and 2015 only six added value, he said. Other deals saw $60bn in value wiped off books as the oil price fell to around $30/barrel.