'Oil prices to stabilise soon'

Petroleum Minister Mani Shankar Aiyar said today the stability in global oil prices would lead to a relatively stable domestic pricing regime.

He said the unprecedented rise in crude oil prices would stabilise soon with the new US administration in place and the end of winter, which spurs demand for heating fuel.

"The current market prices do not put us in a severe crisis. With a foreign exchange reserve of over $135 billion, we are better placed to deal with high oil prices.

In a sense, we can afford to pay higher prices," Aiyar said at an interactive meet organised by the Confederation of Indian Industry here. He said there was no particular reason for the unprecedented spike in crude oil prices in the second half of 2004.

"Not a single drop of oil was lost because of the crisis in Iraq, Nigeria or Venezuela. It was purely speculative," he said.

The controversy over Russian company Yukos did not affect production and neither did the terrorist threat in Saudi Arabia, the minister said.

India had 30 billion tonnes of unexplored hydrocarbon reserves, he said, while inviting international firms to explore oil and gas in a completely free, transparent and business-friendly environment.

"We are no longer a hydrocarbon-poor country. After the recent spate of oil and gas discoveries, we are transiting from having nothing to having something. We have a hydrocarbon resource base of 30 billion tonnes or 225 billion barrels of oil and oil equivalent gas waiting to be discovered," he said.

India offered 100 per cent foreign direct investment in oil and gas exploration and production, transparent and stable policy regime, single window clearance and best international practice, he said, adding 20 oil and gas blocks had been put on auction in the fifth round of bidding under the New Exploration Licensing Policy.

India has offered the gas blocks for exploration and production for boosting domestic crude oil production by 50 per cent to 50 million tonnes in the next 15 years. Six deep sea blocks, two shallow water and 12 onland blocks, which are estimated to attract $1 billion, have been offered for bidding by May 31.

Over $2.53 billion had already been invested in the blocks awarded in the first four rounds of bidding, Aiyar said, adding bidding conditions had been made more attractive to woo investors.

Besides the 20 blocks, Oil and Natural Gas Corporation would also offer stakes in five deep sea blocks "" three in the Krishna-Godavari basin and one each in the Kerala-Konkan offshore and the Gujarat-Kutch offshore.