Special Policy on Oil & Gas Sector for North East under Consideration

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Special policy dispensations to promote investment in Oil and Gas in North East Region are under consideration of the Ministry of Petroleum & Natural Gas.  This was stated by Mr. U P Singh, Additional Secretary and Chairman & Mg Director of Oil India Ltd while addressing the CII North East Energy Summit in Delhi. The oil and gas sector in north east region is confronted with several challenges ranging from demand-side issues to infrastructure to availability of advance technology to arrest the natural decline in oil production.    The Government is conscious of these challenges and the Ministry is scheduled to hold a consultative meeting with Chief Secretaries of all North East States to finalize a Hydrocarbon Vision for North East India, he added.

At the moment North East region supply 10% of the gas and 12% of the oil requirements of the country.  In spite of having huge potential to upscale it,  the sector is witnessing a stagnation or even a deceleration.  The oil production has come down from 4.84 MMT to 4.54 MTA between 2011 to 2015.   Refineries are in fact now being fed from imported crude oil.   This does not augur well with the overall vision of India to reduce oil import dependence from 77% currently to 66% by 2022 and half by 2030.   There is a need to increase investment in exploration as well as production. Commenting on the issues of pipeline infrastructure, he mentioned that it was more like a chicken and egg problem.   While GAIL has requisite capability and funding mechanism, viability has to be well established.

Earlier addressing the conference, Mr. Ved Prakash Mahawar, Director (Onshore), ONGC Ltd said that North East region offers a huge potential in oil & gas sector.  He cited the example of ONGC power plant of 726 MW in Tripura which is one of the most efficient plants in Asia.   It also produces most cost effective electricity in the country.    Tripura is a power surplus state and has huge scope to export it to neighbouring countries.   He further stated that Tripura is a great example of how economic development and political will can transform the region into a peaceful, safe & progressive state.     One of the biggest challenges for the oil industry in North East is to arrest the natural decline in oil production.   There is a need for State-of-the-art technology to arrest the decline and sustain & increase the production, goring forward, he added.  He opined that technology companies may explore joining hands with the existing oil producing companies, to invest in technology to upswing the oil production.   In addition to natural resources, North east region has several other advantages such as educated young workforce.  Industry must take note of it and seriously start looking at North East as an attractive investment destination. For example Tripura holds tremendous potential for rubber processing industries as it is second largest producers of rubber in the country.

Mr. Nitin Zamre, Mg Director, ICF International in his base presentation made a strong case for investment in north east region.  In the way forward, he presented a 5 point agenda which includes fiscal incentives to boost investment, launch of an integrated approach involving all states and the centre to address infrastructure related issues,  greater integration with neighbouring countries, a new Policy on Gas Pricing and Marketing and lastly investment in technology for exploration and production.

Earlier giving the opening remarks, Mr. Sandipan Chakravortty, Chairman, CII North East Council said that the North Eastern Region is going through a significant transformation in terms of economic and industrial development.   The Macro Economic outlook of the region is also on a growth trajectory.   He asserted that  the growth in the hydrocarbon sector specially Gas, is bound to  spur the development of many industries like power, plastic, fertilizer etc giving fillip to entrepreneurship and employment.    Further, with the Act East policy gaining momentum the North East as region is beginning to emerge as a “Gate way to South East Asia”.  Therefore adequate development and management of the North East Energy sector has the potential to be the hub of an envisaged South Asia sub regional energy corridor.

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