For sustaining Strategic Partnerships Indian pricing structure needs to be aligned with global prices: Mr B K Chaturvedi, Member, Planning Commisssion

Delivering the keynote address at the Business Partners Meet “Delivering Value through Strategic Partnerships”, a pre-conference event of PETROTECH 2014 co-organized jointly by the Confederation of Indian Industry (CII), ONGC and Petrotech Society, Mr B K Chaturvedi, Member, Planning Commission,  said, “Domestically, strategic partnerships are important as investments (deep water exploration) which were earlier financially unviable become viable. It is therefore critical for oil and gas companies to reevaluate these projects and develop them jointly. Another key area for strategic partnerships within India is the gas pipeline sector. Indian oil companies and the government, in particular the state governments need to work together to expedite the development of a gas network in India. On the policy front, it is essential to move towards market related pricing which is aligned with international pricing to sustain strategic partnership and encourage investment in the sector.”

Mentioning some potential areas for partnerships in the global context, he said, “India may undertake Research & Development jointly with countries like Japan and Canada in the area of gas hydrates. Also Indian oil and gas companies could explore the possiblity of forming strategic partnerships with their counterparts in other countries to undertake exploration of huge reserves in some countries (canadian Oil Sands) which are relatively unexplored”.

Mr Vivek Rae, Secretary, Ministry of Petroleum & Natural Gas, Government of India in his Special Address said, “Strategic partnerships are essentially at a Government to Government level and are driven by commonality of objective and purpose.” Highlighting some potential partnerships in the oil and gas sector, he said, “Asian gas companies need to come together and negotiate better prices for LNG. Developing an Asian Gas grid and transnational Pipelines are other key areas which have huge potential for strategic partnerships amongst governments and oil and gas companies.” Specifically in the Indian context, he said, “Strategic partnerships between the Government and the Indian oil and gas companies are a promising area as these will enable them to achieve their goals of ensuring energy security. It is also important to form and strengthen the partnerships between the Industry and the academia.”

In the course of his opening remarks, Mr Sudhir Vasudeva, Chairman, CII National Committee on Hydrocarbons &, Chairman & Managing Director, ONGC Ltd, said “While strategic partnerships are an implicit reality, there has been strong disinclination among the established global players from meaningfully engaging in this manner. However, concerns surrounding the environmental impact of our energy operations, technology insurgence (inspired by shale gas) and the emergence of new energy frontiers are key developments that have changed this defensive operating business environment. Emphasising the importance of collaborations, he said, “Better delivery of complex projects, faster technology development, greater investments toward development of core competencies, achieving operational and cost efficiencies leading to shorter turn around time; acquisition and assimilation of best practices/technology solutions are some benefits that can be reaped from these long term and meaningful partnerships.

Delivering the concluding remarks, Mr Sashi Mukundan, Co-Chairman, CII National Committee on Hydrocarbons & Regional President and Head of Country (India), BP Group Companies said, “While there are huge opportunities in the Indian oil and gas sector (vast unexplored basins, significant planned investments in storage, pipeline and distribution infrastructure, and enhancement of refining and petrochemical capacities), challenges including a difficult business environment, lack of adequate infrastructure and significant energy related subsidies are diluting the attractiveness of the sector. There is therefore an urgent need to reset the context and think out of the box to articulate and lay down an energy pathway. As strategic partners, collaboration amongst National, International and private companies, along with governments of countries and communities is the only way forward to realize this scope and scale to ensure energy security. “

Making the theme presentation, Mr Vikas Kaushal, Partner and Head Energy Process Industries for Asia Pacific, AT Kearney, said, “With the Indian oil & gas demand expected to grow rapidly, strategic partnerships across multiple stakeholders would be key to stimulate current business, enable disruptive change in the sector and build scale and efficiency to drive global competitiveness which are key priorities for the sector. In addition, these partnerships would also lead to operational efficiencies, spur innovation & R&D and infrastructure development. “   

Move towards market linked gas pricing is a major and significant reform undertaken by the government in the context of energy security: Mr Vivek Rae, Secretary, Ministry of Petroleum and Natural Gas, India

Delivering the address at the “Energy Security Conference 2013” organized jointly by the Confederation of Indian Industry (CII) and the Ministry of External Affairs, the chief guest, Mr Vivek Rae, Secretary, Ministry of Petroleum and Natural Gas, Government of India,  said, “It is important to deepen and strengthen Research & Development in energy. It is also important to undertake collaborations and capitalise on the synergies amongst the Ministries of Power, Oil and Gas and Renewable Enegy.” Emphasising that there is no policy paralysis in the Oil and Gas sector, he said, “One of the key decisions taken by the Ministry is putting in place a new formula for gas pricing in India which will become operational from 1^st April 2014. This is a step towards aligning the domestic natural gas prices with the global prices and nudging the gas price towards import parity prices. The Ministry is also working closely with operators and efforts are being made to streamline the decision making process.” He  also stressed on the need for putting in place a fiscal regime that promotes and encourages exploration and production activites as this will give returns in terms of royalty, tax revenues and import substitution. Highlighting some of the issues that are work in progress, he said, “The Ministry is currently working on making available adequate data on the sedimentary basins; skilling the exisiting work force and also harnessing the retired talent available in the country; authorising the private sector to prospect for shale oil and gas within the  exisiting contract; and evaluating strategies for stimulating the domestic manufacturing industry for oil rigs and LNG tankers in the country.” 

Highlighting three key global energy trends, Mr Prabhat Kumar, (ES & ITP), Ministry of External Affairs, Government of India, said, “India will emerge as the biggest growth center of energy by 2020. While this implies that the Indian economy is likely to continue to grow, there are also questions on how we will pay for this demand given our strong reliance on fossil fuel imports. In addition, some of the biggest energy importers like the US are becoming energy exporters. Finally, the Middle East may become a key consumer of oil and gas and this may affect their export surplus adversely.” Stressing on the need to capitalize on the opportunities presented by these key developments, he said, “The Middle east region presents a huge opportunity for India as this region will be increasingly catering to Asia rather than the Northern Hemisphere. In addition, Sovereign wealth funds in these countries have grown considerably and India can look at collaborations with countries in this region to develop pipelines, petrochemical complexes, etc.  In addition, we can capitalize on the strong demand for human resources in this sector both globally and within India. We can invest in our human resources and equip them with the right skill set to enable them to undertake projects in other countries.”

Giving his perspective, Mr Chandrajit Banerjee, Director General, Confederation of Indian Industry, in his welcome remarks said, “Energy Security at the broadest level, is primarily about ensuring the continuous availability of commercial energy at competitive prices to support economic growth and requires a strong focus on both strengthening the domestic energy sources as well as acquisition of energy assets overseas.