Demand for crude oil in India has increased significantly. State owned oil companies have been a dominant player in this sector; however private players like Reliance industries too has forayed into the sector in a significant way.
India has the second largest oil reserve in the Asia-Pacific region after China. India had 5.6 billion barrels of oil reserve (January 2007). India’s crude oil reserve is located in the western coast (Mumbai High) and in the northeastern region. However significant oil reserves are present in the state of Rajasthan and Bay of Bengal but at present they are undeveloped. India consumed around 2.63 million barrels per day in 2006. Demand for oil grew by 100,000 barrels per day in the year 2006 according to EIA.
As per the New Exploration License Policy (NELP), India allowed foreign companies to hold 100 per cent equity stake in the oil and natural gas projects in 2000. Indian Oil Corporation which is the government owned company is the dominant player in the downstream sector. Out of 17 refineries in India IOC has 10; three-quarter of India’s oil transportation is controlled by IOC. Reliance industries, which started operating in 1999 is also becoming a major player in the downstream sector.
The refining capacity of the 17 refineries is 2.25 million barrels per day (January 2007). Reliance industries two refinery project in Jamnagar will have a capacity of 660,000 barrel per day (bbl/d) and 580,000 bbl/d. Upon completion it would be the world’s largest refinery. India replaced Administrative Price Mechanism (APM) by Market Determined Price Mechanism (MDPM) in 2002. Private companies have been granted permission to price and market their own product.
Indian government has started Exploration and Production (E&P) projects to find oil reserves within the country to meet the ever growing domestic demand for crude oil.
ONGC floated ONGC Videsh to explore the possibilities in Asia, Africa, the Middle East and Latin America. ONGC Videsh is operating in 15 countries. ONGC Videsh has 25 percent share in Greater Nile Petroleum Operating Company (GNPOC); it also has 20 percent stake in the consortium which is involved in the Sakhalin-I project in Russia- the consortium is being led by Exxon Mobil.
Public and Private participation will help India to reduce its dependence on other countries for crude oil. However unless and until a huge oil reserve is explored India will have to depend on import especially from OPEC to meet its oil needs.
Sources:
Energy Information Administration
Oil and Gas Journal
Times of India
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