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The lifting of economic sanctions against Iran as a result of the just concluded nuclear deal with six world powers will lead to slide in oil prices and thus augurs well for India, petroleum minister Dharmendra Pradhan has said.
He also said the government will kick-start the next round of bidding for oil and gas blocks by the year end.
"The signing of the Iran deal has come as good news for us. It will cut down India's crude oil import bill as prices will slide," Pradhan said, speaking at an oil and gas event here.
Oil prices had tumbled on Tuesday after negotiators from Iran and major world powers announced they had reached a deal to monitor Tehran's nuclear program, which the West says will curb its efforts to build a nuclear bomb.
Iran's compliance with the agreement will lead to a lifting of crippling western economic sanctions which have restricted its key oil exports. Iran is expected to pump in upto 700,000 barrels per day (bpd) of fresh oil supply in the market by the first half of 2016, according to analyst estimates.
India imported 10-16 per cent of its total crude from Iran between 2002 and 2012, pre sanctions. Among the key beneficiaries of the new Iranian oil supply in India could be state-run petroleum explorer ONGC's subsidiary MRPL, Indian Oil (IOC) and Essar Oil which import a sizeable chunk of the crude.
Lower crude prices will bring down India's energy import bill as every Dollar drop in oil prices reduces the government's subsidy payments by $1 billion. The country imported 189 MT of crude at a cost of 112 $billion last financial year.
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Pradhan said his ministry will launch the tenth NELP round by end of current fiscal. He had last month said the ministry is talking to stake holders draft a new framework to bid for oil and natural gas reserves.
Among the proposals, the ministry is examining the Open Acreage Licensing Policy (OALP) under which companies can bid for any amount of acreage in contrast to the previous practice of putting the fixed blocks for auction.
The minister also said he had a meeting with Bob Dudley, Chief Executive Officer of British oil and gas major BP Plc, today who assured the government of continued investments. "He assured the global oil majors' participation in the Indian oil and gas sector will increase going forward," Pradhan said.
He also said the ministry is working to rapidly expand the existing Piped natural Gas (PNG) and Compressed Natural Gas (CNG) networks in the country. Pradhan also appealed to wealthy citizens to give up cooking gas subsidies to enable the government to better target dole-outs to the poor.
