Will doubling gas price for domestic producers draw the ExxonMobils and Chevrons of the world to invest in India’s oil and gas sector?
The petroleum ministry under M Veerappa Moily is justifying the hike in gas prices saying this would incentivise and attract investors, experts see no global major taking part in the NELP-10 round of auction for 56 oil and gas exploration blocks.
“Why should gas producers in India (ONGC, OIL, RIL, Cairn and others) be paid double the existing price of $4.2 a unit for producing gas in India? Nowhere in the world do domestic gas producers get a price as high as $8.4 a unit,” said the head of a leading state-owned oil and gas enterprise in India on condition of anonymity.
“While a higher gas price will surely incentivise producers, the government is duty-bound to strike a balance between producers and the user industry such as power and fertiliser sectors (while setting prices),” he said.
The $8.4-per-unit price is actually the weighted average price of gas in international markets. “It is not the actual cost of production incurred by developers,” he pointed out.
Moily, however, thinks otherwise. “The government needs to take bold decisions if it wants the Chevrons and the Exxons of the world to come and invest in India’s energy sector,” he said.
“India was losing out to China...where are the big global energy companies in India, only one BP Plc has come, which, too, we are driving away by opposing important decisions,” Moily said.
Source: http://www.pressdisplay.com/pressdisplay/viewer.aspx
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