The Union ministry for petroleum & natural gas is finalising a new three-point oil and gas exploration policy which will lead to far-reaching changes.
First of all, Oil & Natural Gas Corporation (ONGC) and Oil India Limited (OIL) will have to compete with private bidders for exploration licences.
Secondly, the government will offer a level playing field to Indian oil companies by allowing them to charge international prices for the crude they produce.
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The international oil price has been on the rise over the past few months. From under $20 a barrel a year ago, it increased to $22 in September 1996 and is currently as high as $24 a barrel.
The third component of the new policy is to improve fiscal benefits for exploration work in areas that have not been explored so far.
Union minister of state for oil & natural gas T R Baalu said in Calcutta on Saturday that the policy guidelines will be announced in the next session of the Parliament.
Baalu, who was on a day-long visit to Calcutta to review various projects of oil companies in the ninth plan period, had to defer his plans to visit Guwahati and Agartala due the upsurge in insurgency.
He hopes to be able to make the visits in the near future.
On West Bengal's oil exploration programme, Baalu said all drilling activities had been stopped as ONGC had failed to strike any commercial source of oil or gas in the state even after an investment of Rs 645 crore till March 1996.
Of this amount, Rs 458 crore was spent on drilling while Rs 169 crore were spent on surveys. Another Rs 17 crore went in for R&D programmes.
No funds have been proposed for further drilling in the state. ONGC would first like to re-test the oil well at Ichhapur, process the available data and conduct 3- dimensional surveys.
The minister hopes to re-open the issue of laying a gas pipeline through Bangladesh to utilise the gas reserves in Tripura.
However, Baalu had good news for the state with respect to LPGs. Negotiations are under way to set up three LPG import terminals at Haldia at a total investment of Rs 534 crore.
Each terminal will have a capacity of four lakh tonnes and cost Rs 178 crore.
One will be a joint venture between IOC and Petramax of Malayasia. The second will be a joint venture between IBP and Caltex of USA while the third will be between HPC and Total of France.
Baalu said each of the three Rs 178 crore projects will have an equity of Rs 60 crore.
The two joint venture partners will each subscribe to 26 per cent of the stake while the remaining 48 per cent will be offered to the public.
The minister promised to make LPG available on demand by the turn of the century.
In addition to the LPG terminals proposed at Haldia, several are coming up at other ports like Kandla, Mangalore, Kakinada, Ennore, and Pondicherry. Mean-while, West Bengal will have nine LPG bottling plants in the ninth plan at an investment of Rs 278 crore. While three of them will be located around Calcutta, there will be one each at Bardhaman, Rampurhat, Kharagpur, Siliguri, Baharampur and Krishnanagore.
The nine bottling plants will have a combined bottling capacity of 2.78 lakh tonnes against the current capacity of 1.54 lakh tonnes.
The investment in the current plan period has been Rs 80 crore, which will add 86,000 tonnes to the bottling capacity. The LPG supply in the state is only 1.48 lakh tonnes against a demand of 2.32 lakh tonnes. Based on an expected annual demand growth of 6-7 per cent, a demand-supply gap of 94,328 tonnes has been projected.