A Confederation of Indian Industry (CII) delegation on Monday called on the Union Minister for Petroleum and Natural Gas, Mr Jaipal Reddy, seeking acceleration of exploration activity in deep offshore and onshore areas.
According to CII, lack of inter-ministerial co-ordination on policy issues is leading to significant delays. A possible solution was to offer blocks only after all regulatory and statutory approvals were in place, CII said in a statement.
The industry body said there should be no discrimination between oil and gas on the issue of the seven-year Section 80IB tax holiday. It recommended creation of an independent regulator for the industry and demarcation of roles between the regulator and policymaker.
Transition to a gas-based economy with marketing and pricing freedom would give flexibility to manage technical and commercial risks, it said. The industry body pointed out that the proposed gas price pooling mechanism under the Production Sharing Contract (PSC) could potentially distort price discovery.
In addition, a “Declared Good Status” for natural gas, again a long-standing demand of the industry, will avoid varying sales tax or value added tax in different States. Gas marketing should be according to the PSC which is an arms-length market-determined price.
India imports over 75 per cent of its annual crude oil requirement, with oil and gas accounting for nearly 45 per cent of India's energy needs. Investments in the sector of late have varied from low to moderate with 15 per cent of the total area yet to be explored.
Only 1.06 million sq km area is under active petroleum exploration licences out of an estimated sedimentary area of 3.14 million sq km.