'$3 bn stake in oil fields overseas'

Overseas gas field acquisitions to cut dependence on volatile markets

The government will invest $1 billion every year till 2015 in acquiring oil and gas fields abroad to cut dependence on highly volatile international market for its crude oil requirements.

Petroleum secretary BK Chaturvedi said the 70 per cent dependence on imports to meet domestic needs makes the country vulnerable to supply disruptions and adverse effects of extreme volatality, like the one being witnessed currently with oil prices soaring to $41 a barrel.

The secretary, who was delivering a talk at the Confederation of Indian Industries, said, "We have already invested about $3 billion in taking stake in oil and gas fields in nine countries. Further, $1 billion per annum will be invested till 2015 with a view to meet 15 per cent of the demand."

The overseas arm of Oil and Natural Gas Corporation, ONGC Videsh Limited, has already taken equity in an oil field in Sudan, which is giving 3 million tonnes of crude oil annually to India.

Besides, a 20 per cent stake in Sakhalin field in Russia will give 5 million tonnes from 2005 and an equal quantity would be received in exchange of 50 per cent in an Angola block, he said.

Moreover, ONGC Videsh Limited has also picked stakes in oil fields in Syria, Libya, Sudan, Iran, Iraq, Vietnam and Myanmar.

The cost of crude oil production from these fields may be $6-7 a barrel as against the prevailing international price of $41.5 a barrel. This will largely benefit India in reducing its dependence, he said.

The secretary said that the fear of supply disruption, sudden demand and taxation structure were responsible for the rising oil prices. Besides, world oil demand estimates have always been higher than actual demand.

"Increase in prices will have a cascading effect on the economy, thereby affecting GDP. A $10 per barrel increase in crude oil price will affect GDP by 0.5 per cent. A $10 increase would result in $7.5 billion outgo," he said.

The petroleum secretary said India is agressively pursuing oil and gas exploration within the country to boost the 32 million tonnes current annual production.

In the meantime, hit hard due to the non-revision of oil prices since January this year, Indian Oil Corporation (IOC) is seeking a rise of Rs 4-5 per litre to offset the losses.

Marketing director of IOC, NG Kannan, told reporters in Kolkata today that during the period from April to May this year, the combined loss of IOC and its merged subsidiary IBP due to under-recovery, was to the tune of Rs 301 crore.

The IOC Marketing Director said that the desirable extent of revision was Rs 4-5 per litre, adding that the matter would be left to the new government when it assumes office.

Kannan said that the in the year 2003-04, IOC's loss due to under-recovery in oil, kerosene and LPG was Rs 2,346.86 crore, while that of the total industry was Rs 4,337.50 crore.