Details of ONGC's post-APM wish list

Vol 5, PW 19 (07 Nov 01) Midstream & Downstream

What does ONGC want after 31st March 2002 when the government abolishes the Administered Pricing Mechanism and controlled pricing of LPG, kerosene, diesel and petrol We give below excerpts from ONGC's wish list as presented at a meeting with additional oil secretary Naresh Narad.

Clarity needed on roles of (proposed) Upstream Hydrocarbon Regulatory Authority and DGH so that overlapping is avoided Freedom to choose the market and the price of crude oil. Though there is no intention to export crude oil, option should be given to ONGC to leverage the price Exemption from liability of any subsidy on petroleum products such as LPG and kerosene produced and sold by it Freedom to market and price gas produced.

Access to pipeline/infrastructure owned by GAIL on 'common carrier principle' Freedom to negotiate (crude) prices with customers on commercial principles Stable and attractive fiscal regime at par with NELP for pre-NELP areas Reimburse dues with Oil Coordination Committee/oil ministry worth Rs1, 850cr ($392m) as well as ONGC's oil bonds redemption worth Rs385cr ($81.6m) What is the oil ministry's response Some of it is waffle, but we reproduce here the salient points There would be two regulators, one in the upstream and the other in the downstream. The upstream regulator may be in place by 31st March 2002, while the downstream regulator would be in place by 31st March 2002 Some measures of control may be there on gas prices, depending on cabinet decisions.

There may not be full autonomy to ONGC/Oil India on gas marketing. However they can discuss this with GAIL Export of petroleum will be governed by (government's) Export-Import policy ONGC/Oil India should discuss with marketing companies regarding post-APM arrangements about selling their value added products.

Subsidies on LPG, kerosene will be "addressed" by downstream companies. Upstream companies will get market determined prices Pricing of crude oil will be based on import parity ONGC/Oil India should discuss with refining companies that currently buy crude from them, about selling crude beyond 31st March 2002 Transition period issues, including pricing issues would be addressed in the cabinet note for government's decision Fiscal issues for the upstream sector are also being addressed in the 10th five-year plan document.

Royalty issues are being addressed by the royalty committee in the ministry Oil Coordination Committee will verify the claims of ONGC "..

.and will settle them expeditiously"