India is examining the possibility of establishing strategic reserves of crude and petroleum products to meet unforeseen disturbances in the supply chain and strengthen the country's oil security.
Expressing concern over the volatility in crude supplies and prices, Prime Minister Atal Bihari Vajpayee today said oil security was crucial to guard against the volatile changes.
Vajpayee, who was delivering the keynote address at the Petrotech 2003 conference here, said crude prices might shoot if tensions rose in West Asia, leading to a prolonged shortage of supplies in the global oil market.
"This may adversely affect our economy. Recent developments have already affected oil markets and sent prices upwards."
The Prime Minister said the country had embarked upon a detailed study to identify ways to minimise the supply risk from external sources.
Security of supplies had become one of the most important challenges, particularly for nations dependent on oil imports to sustain their economic growth, he added.
Cautioning that without substantial domestic production, the nation would be subject to the volatility in crude supplies and prices and oil security would be difficult to achieve, Vajpayee said, "We are aware of the need to find viable strategies to explore, produce, and refine more from our hydrocarbon resources."
He said it was for this reason India had opened up the petroleum sector to private and foreign investment.
It would not only encourage both domestic and international enterprises to supplement the efforts of public sector units (PSUs), the petroleum companies were also looking at new areas both within the country and outside to match the rapidly growing demand for petroleum products, the Prime Minister added.
"In the petroleum industry, globalisation has provided an opportunity for India to be a significant centre for equipment and services both in the upstream and downstream sectors," he said.
Extending a promise to put in place a transparent and independent regulatory system to ensure a healthy and sustained development of the hydrocarbon sector, Vajpayee said the petroleum regulatory Bill was before Parliament and "we will strive to ensure its early passage".
Earlier, in his welcome address, Petroleum Minister Ram Naik said the regulatory Bill would ensure competition and a level playing field for the benefit of customers.
He said the country had built a strong industry in which both the state-owned oil companies and the private operators had an equal scope for growth.
Vajpayee also presented the Petrotech Society's life-time achievement awards for contribution to the petroleum sector to late Dhirubhai Ambani, Amiya Bhushan Dasgupta and N B Prasad.
The award for Ambani, the founder of Reliance Industries, in recognition of his achievements in the downstream petroleum sector, was received by Reliance Group President V Balasubramaniam.
