COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Hydrocarbon sector a potential area for investment in India

Economic reforms coupled with the policy of phased deregulation of the oil industry has increased the investment opportunities for the private sector and multinationals in the hydrocarbon sector in India, according to Indian Oil chairman M A Pathan.

Delivering the keynote address at a symposium on oil and gas review in Bombay, Pathan said the economic reforms have necessitated strengthening of country's hydrocarbon sector to compete with global market forces. The investment opportunities were ample particularly in refining, petrochemicals and infrastructure including ports, pipelines and tankages.

With a vibrant economy and the largest number of consumers, the country is brimming with investment opportunities, he added.

He said consumption of petroleum products in the country had been increasing in the recent past with an annual growth rate of seven per cent and the current demand was projected to double by the end of the Ninth Plan (2001 to 2007).

The country, presently with its 14 operating refineries, had a combined refining capacity of 61.55 million metric tonnes per annum and the oil industry had drawn up plans to add another 70 MMTPA during the next five years.

These include low-cost expansions and de-bottlenecking at existing refineries, capacity addition through grassroots refineries and investment by the private sector.

Simultaneously, additonal refining capacity of 42 MMTPA had been planned in the Tenth Plan -- 25 MMTPA under joint venture and 17 MMTPA in the private sector. With this the country's refining capacity will reach 173 MMTPA per annum by the terminal year of the Tenth Plan (2006 to 2007).

Pathan said like in India, the demand for petroleum products in the Asia-Pacific region was also growing rapidly. Although the economic crisis, experienced recently by some of the countries in this region, may adversely affect the demand growth rate, future projections indicate a deficit scenario.

India with its vast coastline, proximity to growing demand centres and being en route from the main source of crude oil, the Middle East, offers ample opportunities for setting up export-oriented refineries.

Apart from refining capacities planned for the domestic market, the government had issued letters of intent for export-oriented unit refineries with an aggregate capacity of 29 MMTPA. They were being given several concessions, including duty free import of capital goods and other inputs.

The oil industry was also exploring avenues for alternative fuels in order to cater to the ever increasing demand for energy in the country. A joint venture company of four oil public sector units had been formed to create infrastructure for import and marketing of liquified natural gas. Simultaneously, development and commercialisation of di-methyl-ether using natural gas as feedstock was also being explored in association with Amoco of the USA.

Pathan said the oil industry in India had world class expertise in diverse areas, whether it was oil exploration and production, refining, transportation, marketing or research and development. Automation and information technology was also being given due importance in the industry.

As part of the cost reduction measures, emphasis was also being laid on pipeline transportation of crude oil supply to upcoming refineries and transportation of finished products to high consumption centres spread over the length and breadth of this vast country. The present pipeline network will be raised to about 68 MMTPA by 2002 with the addition of a number of new pipelines through joint ventures.

In addition, pipeline projects of about 10,000 kilometres have already been identified to enable development of a pipeline grid across the country. Branches of these pipelines would also connect the major consumption centres of central India. The network of pipelines would ensure uninterrupted supply of petroleum products, he said.

UNI