High priority is to find oil and gas in India: Tripathi

Vol 9, PW 4 (01 Jun 05) People & Policy

When will India remove subsidies on the sale of natural gas How important are oil acquisitions abroad Who will own the India to Iran pipeline PETROWATCH put these questions to oil secretary Sushil Tripathi.

See below: Can you envisage a time when the Indian government will remove subsidies on gas The Indian government has no subsidies on gas developed by joint ventures and other operators. The government only has subsidies on gas developed by ONGC so I dont see why anyone should feel apprehensive or have any concern at all.

Anybody can sell gas; anybody can develop gas. The only condition we have is that you sell in India - thats all.

It is up to the market. You develop gas; you sell gas.

We are not in the picture except in the case of fields given to ONGC on a nomination basis. There we are saying that their prices are controlled.

But it is still government policy to sell gas at a lower rate. Those (ONGC) fields were developed 30 years ago so the costs were very low.

At that time the gas was being flared so the market had to be developed. Secondly, most of the market is in the power and fertiliser sector and they are not at the moment in a position to pay higher prices.

They are saying that they have to have a mix. They are paying higher prices but they also need to get the benefit of gas developed a long time ago and under contract with them for a long time.

Thats as far as ONGC is concerned. Others are not concerned its only ONGC.

What about LPG subsidies LPG is subsidised. Companies are subsidising it and the government is partly subsidising it.

Is that sustainable in the long run By March 2007 that should be over, we are hoping it will be over. We have no excise duty and no custom duty on LPG.

What more can be done You bring LPG; you sell it here. You find markets; you sell it.

Are overseas oil acquisitions a high priority for the government It is a priority, but a very high priority I dont know if we can say that. A higher priority is to find oil and gas in India.

Wouldnt it be better to put those resources invested in overseas acquisition into use for exploration at home I think the perception is not entirely correct because the higher priority is to find oil and gas in India for which we are doing everything possible. But we cannot find the geology.

If there is not enough oil and gas then what can we do We are going into the deep sea, 4000 metres deep into the sea. We are going into difficult regions to find oil and gas in India.

But we can find only what the current technology and skills allow. Therefore on the basis of those technologies and skills, if with lesser investment and less difficulty we can find much more oil and gas somewhere else do you think we should deny ourselves that Is overseas equity cheaper in the medium term than buying oil on the open market Yes, absolutely.

We wouldnt do it if it were not. Its not about security.

Its a commercial issue. What savings do you make It depends from property to property.

But we have a hurdle rate, which is much higher and we take a long-term forecast of buyers, which is much lower so you can imagine what it could be like. Its purely a commercial issue.

Our hurdle rates are quite high because there are risks and we take a long-term oil price in our calculations, which is very low, in the range of about $20 to $22. Its purely commercial.

Turning to the India-Pakistan pipeline: who is going to own it Thats a good question. We are trying to figure that out and it will take some time.

Those things will be under discussion with Pakistan. Initially we started with the Iranians doing everything and bringing the pipeline up to our border and selling gas to us.

Now we are looking at the possibility of Indian companies also participating, provided everything works out. But we are in the very initial stages.

Until now our position has been we deal with Iran and they sell gas to us. What they do, whom they bring together and who constructs it is their business.

We are concerned with the quality, quantity, composition and price of gas at our border. We want to deal with Iran on our border.

What Iran does to transport the gas is their business. Pakistans oil sector is also opening up.

With the recent thaw in relations would there be any interest from Indian state owned oil companies bidding for blocks Well first thing, Indian private sector companies are showing interest. Reliance has already shown interest in buying a petrochemical plant there.

Lets see how these things develop. We will tell our oil companies once the situation is comfortable.

We will be guided by MEA (Ministry of External Affairs) and if we are welcome we will go; if we are not welcome then why would we If we are welcome we would certainly like to. If there is no difficulty on their side then we would like to.

So first step will be private sector companies. The report on Synergy in Energy is being postponed to 15th June.

How is it progressing The report might come earlier than that. That is the extension given to the committee.

I should think by the end of the month maybe the report should come. Its an interesting subject.

Its been engaging the minds of very senior and experienced people. So lets see what they come up with.

If you have any suggestions please pass them on! There has been talk of deliberations on the Olive Ridley turtles delaying drilling for two or three years. Is that true We have suggested to the ministry of the environment to let exploratory activity continue.

Because then only will it be possible to realistically measure the environmental impact of that and at any point in time if they feel that this is damaging then they can stop it. So it is with the environment ministry.

We have requested them to allow some drilling and at the same time have this satellite monitoring of the turtles. I think they have set up a committee and they will place these suggestions in front of it.

At end of the year your tenure in the ministry comes to an end. What will you do I will retire from government.

I will go home! What would you like to achieve in the months before you leave Id like to see that I get companies to perform well, become more efficient to the extent that they can secure energy assets here in India and outside. Then well have done something of worth for the people of India.