Investments in oil and natural gas can create huge wealth for promoters: Mr. D K Sarraf, Chairperson, Petroleum & Natural Gas Regulatory Board


January 29, 2020

New Delhi

Investments in oil and natural gas can create huge wealth for promoters: Mr. D K Sarraf, Chairperson, Petroleum & Natural Gas Regulatory Board

The Petroleum and Natural Gas Regulatory Board (PNGRB), Government of India, will soon hold the 11th round of bidding for City Gas Distribution that investors should keep a sharp lookout as it presented a sound business opportunity.

Calling on the investors to consider the plethora of opportunities offered by the natural gas sector at a time when government is focusing on increasing the share of natural gas in overall energy needs of the country, Mr. D K Sarraf, Chairperson, Petroleum & Natural Gas Regulatory Board, Government of India, said it is a sector with immense potential to create wealth for the promoters of companies.

Addressing the National Oil & Gas Conclave 2020, held by the PHD Chamber of Commerce and Industry at the PHD House in New Delhi today, Mr. Sarraf, the Chief Guest, cited the example of Adani Gas and other firms that earned huge profits and increased the wealth of the companies to enthuse small and medium investors to look at the exciting opportunities up ahead. The 11th round of bidding will be announced very shortly, he said and added there was a great interest generated in the previous rounds of bidding in which several bidders got licenses.

In the 9th round 86 bidders got licenses and in the 10th round another 50 were given licenses. The gas sector will be booming in the near future because the government had taken policy initiatives to increase the share of natural gas in the basket of energy sources from the present 6 per cent to 15 per cent by the year 2030. On the piped distribution of natural gas, at present India had a network of 15,000 km. This is intended to be doubled in the next few years, he said and added, PNGRB has authorized construction of so many pipelines. The country is also aiming to build a gas trading hub to help develop the domestic gas market and is working out regulations for the proposed hub, said Mr. Sarraf. The private operators needed to be given operational freedom in marketing and pricing, he said.

The PNGRB also wants the inclusion of natural gas in the GST regime, he said. Other than in the auto sector and households, the government is encouraging the use of gas by other industries as well, said Mr. Sarraf.

The government has taken a series of initiatives to make the sector investor-friendly, said Mr. Sarraf and added these were resulting in greater interest in bidding in the upstream projects by the private investors. Since natural gas had a tremendous cost advantage over petrol, diesel, it would increase savings of the users and also for people who use piped gas supplies at home.

On the whole India’s energy needs will only be increasing tremendously as the country progress in its journey towards the $ 5 trillion economy by 2024.

In his keynote address to the conclave organized by the PHD Chamber, the Guest of Honour, Mr. Amar Nath, IAS, Joint Secretary, Ministry of Petroleum & Natural Gas, Government of India, presented a snapshot of what the government was doing in the sector and said that the sector presented adequate returns to investors in the upstream projects.

Outlining the various initiatives taken by the government, Mr. Amar Nath said the increasing role the government is playing as a facilitator, not only in the Ministry but also helping investors with related work in other Ministries, the ease of doing business had increased. The government does not intervene in operations and had given the investors greater freedom to choose the blocks they want to bid all the year-round as opposed to NELP where the government carved out the blocks.

The new Open Acreage License Policy gives the bidders an opportunity to bid all the year round and the bidders can choose an area and only then it is put up for bidding, said Mr. Nath. He also mentioned the National Data Repository that is made available to all. The data repository, updated constantly, has been set up at a cost of Rs 3000 crore.

The Government is also serious in getting feedback from the investors and incorporate suggestions that make the process easier, he said referring to a recent stakeholders meeting held by the Minister. This is an effort to find out how best the government can help in the implementation of cleared projects. Then there is dispute redressal mechanism in place, he said.

Dr. C Laxma Reddy, Additional Director, Director General Exploration, Directorate General of Hydrocarbons (DGH), said the DGH is working more like an agent of the investors from the private sector and a facilitator of the sector which is they, the key driver of the country’s economic growth. As the country’s GDP grows, its energy requirements will also grow. India at present is the third-largest consumer of fuel after the USA and China and by 2040 India’s oil demand will double to 10 million barrels per day.

The stress of the government is also to increase domestic production to at least substitute 10 per cent of imports, said Dr. Reddy. The new bidding process, OALP, is but one of the initiatives taken by the government to improve the ease of doing business. Four rounds of OLAP bidding have been carried out and an area allotted is 1, 36,000 sq km for this, he said.

The government policies are aimed at increasing output, increase in exploration in unexplored areas, Dr. Reddy said. The national oil companies have also been allowed to have liaison with foreign companies to bring in technology that helps efficiency in production. Dr. Reddy urged the industry to partner the government in the sustainable growth in the hydrocarbon sector.

Welcoming the guests, Mr. Sanjay Aggarwal, Senior Vice President, PHD Chamber, set the tone for the conclave when he presented a birds-eye view of the energy scenario in India and the world. He argued the case for sourcing India’s energy needs from sources other than the Middle East that at present was volatile and unpredictable. As India’s oil requirements will grow in the future, this is one aspect, he hoped, the government will keep in mind. The government has plans to increase share of natural gas to 15 per cent in India’s fuel basket in order to make India a gas-based economy, he said.

Earlier, Mr. Rajeev Kumar Mathur, Chair, Hydrocarbons Committee, PHD Chamber, hoped gas would come under the GST regime and welcomed the various policy initiatives of the government and said it would be nice if the states also came out with their respective state-specific natural gas policies that will enable clean fuel distribution across the country.

Since Indian economic growth will fuel energy demand, this sector is quite conducive to investments, added Mr. Aggarwal.

Dr. J P Gupta, Chair, Environment Committee, PHD Chamber,presented the vote of thanks.

Participants held discussions on Recent Trends and Initiatives in Upstream Sector, Opportunities & Challenges in Indian Downstream Sector and Technology Intervention for value Creation and Sustainability of Gas Sector.


Media Division

PHD Chamber of Commerce and Industry