India needs private investment to boost its oil and gas production that has stagnated for years forcing the country to import nearly 80% of its crude oil requirement and leaving many of its power plants idle or underutilised. The government’s attempts at luring foreign investors to develop its hydrocarbon reserves have met with limited success.
The government is working on a new oil and gas exploration policy that will replace the 16year-old New Exploration Licensing Policy (NELP), which has guided nine rounds of auc tion so far. It hopes to auction hydrocarbon reserves in a fresh round, and is under pressure to design a policy that will help attract investors, especially after companies signed up production sharing contracts for barely half the blocks offered in the last two rounds. “We are quite interested in the new policy which suggests that the open acreage licence OLAP (may be offered) and we think that may give us a different opportunity to look,“ said Yasmine Hilton, chairman of Shell Companies in India.
Shell has no particular preference for the fiscal regime to be followed in exploration and production as the company works across the globe under different contrac tual terms, Hilton said. “We can work in any regime as long as there is stability in that regime,“ she said. “Once you enter an agreement, it’s a long-term agreement, so you need stability across that, we don’t want change over that period,“ she added.
A debate has been raging in India with private players pleading for the existing cost-recovery model where explorers get to recover their cost before sharing profit with the government. The government is mulling replacing this with a revenue-sharing model where explorer will have to give the government a share from the revenue.
Shell is bullish on India’s gas market and plans to expand its capacity at liquefied natural gas (LNG) terminal in Hazira, Gujarat. “We are currently in discussions to expand that further, that’s subject to the joint venture itself but we are clearly keen and supportive of these plans,“ Brekelmans said. Shell also has plans to set up a floating LNG terminal at Kakinada, Andhra Pradesh.
“We are very clear that we are interested in gas in India. First of all because we are a leading company in gas. Secondly , because we feel there is significant growth ahead in terms of gas demand,“ Brekelmans said.