Global crude oil price of Indian Basket was US$ 70.08 per bbl on 02.12.2014

The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 70.08 per barrel (bbl) on 02.12.2014. This was higher than the price of US$ 67.72 per bbl on previous publishing day of 01.12.2014.

In rupee terms, the price of Indian Basket increased to Rs 4340.05 per bbl on 02.12.2014 as compared to Rs 4208.12 per bbl on 01.12.2014. Rupee closed stronger at Rs 61.93 per US$ on 02.12.2014 as against Rs 62.14 per US$ on 01.12.2014.

The table below gives details in this regard:

Particulars	Unit	Price on Dec 02, 2014 (Previous trading day i.e. 01.12.2014)	Pricing Fortnight for 01.12.2014 (Nov 13 to Nov 26, 2014)
Crude Oil (Indian Basket)	($/bbl)	70.08 (67.72)	76.43
Crude Oil (Indian Basket)	(Rs/bbl	4340.05 (4208.12)	4723.37
Exchange Rate	(Rs/$)	61.93 (62.14)	61.80

MJPS/Rk/Daily Crude oil price- 03.12.2014

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Increasing Supply of Oil and Gas

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Rajya Sabha in a written reply today that the domestic refining capacity for all petroleum products, except LPG is in excess of the domestic demand. The balance requirement of LPG is met through imports. Such imports are planned on calendar year basis depending upon projected LPG demand and availability ex indigenous source. The supply demand scenario is monitored on regular basis and additional imports are tied up as and when required.

In order to accelerate the pace of exploration and production of oil and gas in the country, the Government has taken various policy initiatives which include:

i. Offering of exploration blocks through NELP bidding rounds.

ii. Encouraging exploration and exploitation of alternative energy sources, such as Coal Bed Methane (CBM), Shale Gas/Shale Oil and Gas Hydrates etc.

iii. Policy for exploration and exploitation of Shale Gas/Shale Oil resources by NOCs under the Nomination Regime.

iv. Policy for exploration in the Mining Lease (ML) areas after the expiry of exploration period.

v. Policy on Non-exclusive Multi-client Speculative Survey for assessment of unexplored sedimentary basins.

vi. Policy frame work for relaxation, extensions and clarifications at the development and production stage under the PSC regime for early monetization of hydrocarbon discoveries.

Presently there are no restrictions on the quantity of crude oil and petroleum products imports in India. However, Public Sector Oil Marketing Companies (OMCs) are allowed to import crude oil only on FOB basis. CFR imports are being made with the grant of No objection from Ministry of Shipping on case-to-case basis.

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Guidelines to LPG Distributors for New Connections

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Rajya Sabha in a written reply today that the documents required to be produced by a customer before a Public Sector Oil Marketing Companies (OMCs) LPG distributor for taking a LPG gas connection are valid Proof of Identity (POI) and valid Proof of Address (POA). The prospective customer has to submit a one page KYC (Know Your Claim) form and a standard Declaration indicating that he/she is not having any domestic LPG connection also.

OMCs have reported that it is not mandatory for a prospective customer to produce ration card for releasing a new LPG connection.

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Investment for Oil and Gas Exploration in Odisha

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Rajya Sabha in a written reply today that the Government has planned to conduct 2D survey of all unapprised sedimentary basins of India including Mahanadi –NEC (North East Coast) basin.

In Mahanadi – NEC Basin (onland, shallow water and deep water) 20 blocks have been awarded of which, 14 have been relinquished, 2 are proposed to be relinquished and 4 are operational. Exploratory work in 4 operational blocks is in progress.

13 gas discoveries have been made in the four operational Blocks in Mahanadi – NEC basins namely MN-DWN-98/3, MN-OSN-2000/2 and NEC-DWN-2002/2 of ONGC and NEC-OSN-97/2 of Reliance India Limited. Inplace reserves of 81.87 MMToe and ultimate reserves of 7.93 MMToe have been estimated by the ONGC in their three blocks.

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Fake Gas Cylinders

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Rajya Sabha in a written reply today that the possibility of spurious gas cylinders cannot be ruled out. Public Sector Oil Marketing Companies (OMCs) have reported the LPG cylinders received from their distributors/transporters at the bottling plants are checked for the genuineness. Spurious cylinders are confiscated and de-shaped and erring distributors/transporters are penalized as per the provisions of transport contract.

Details of spurious LPG cylinders detected in Delhi by OMCs at their LPG bottling plants during last three years are as under:-

2011-12	2012-13	2013-14
32	496	580

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Kelkar Panel Recommendation for PSC for Oil Exploration/Production

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Rajya Sabha in a written reply today that the committee has recommended the Production Sharing Contract (PSC) model as the preferred contractual model for Indian basins. The Kelkar Committee has proposed two fiscal regimes either of which could be deployed:

(i) Model I: PSC linked to Investment Multiple, with modified contract administration including self-certification costs by the contractors: and

(ii) Model II: PSC with ‘biddable’ supernormal profits tax

(b) The Committee has recommended that DGH should be transitioned from its current role of being an advisor to being an independent regulator for the upstream oil and gas sector.

The Committee has recommended that DGH should be given quasi judicial powers accompanied by an Appellate Tribunal for fast and effective dispute resolution as is the case with SEBI. The status of the head of the DGH should be at par with that of other empowered regulator heads in the country, such as SEBI, TRAI, etc.

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Disclosure by a Country-Wide Gang Involved in Meter Tempering

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Rajya Sabha in a written reply today that Oil Marketing Companies (OMCs) have reported that no country-wide gang involved in meter tampering has been arrested recently. Incident of tampering involving a few retails outlets in Hyderabad in January, 2014 and another retail outlet in Bhopal in November, 2014 has however been reported.

Action is taken in established cases of short supply irregularity as follows: (i) Irregularity: Short Delivery (W&M Seals intact): Sales and supplies to be suspended forthwith from the concerned dispensing unit till recalibration & re-stamping are carried out before recommencement of sales.

First Instance: Warning letter to be issued.

Second Instance: within one year of 1st instance: of Rs. 10,000/- per nozzle found delivering short.

Third and subsequent instances within one year of the 1st instance: Rs. 25,000/- per nozzle found delivering short.

(ii) Irregularity: Delivery of product with W&M seal/totaliser seal tampered : Sales and Supplies to be suspended from the concerned dispensing unit, DU sealed. Samples to be drawn of all the products and sent to Lab for testing. Termination (in case of unsatisfactory reply by dealer to the show cause notice issued by the company action of termination of dealership irrespective of delivery being short/excess/correct).

(iii) Irregularity: Additional fitting found in Dispensing Unit (DU): Sales and supplies to be suspended from the concerned dispensing unit DU sealed. Samples to be drawn of all the products and sent to Lab for testing. (In case of unsatisfactory reply by Dealer to the show-cause notice issued by the company, action of Termination of dealership irrespective of delivery being short/excess/correct).

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Non-Recovery of Losses of KG D6 Basin

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Rajya Sabha in a written reply today that the Ministry vide its letter dated 02.05.2012, 10.09.2013, 14.11.2013 and 10.07.2014, had disallowed development cost based on the cumulative shortfall in production of gas vis-à-vis production estimates under the approved AIDP (Addendum to Initial Development Plan) for corresponding years incurred by the Contractor. The total disallowed development costs as on 31st March 2014 amounts to US $ 2.376 billion. As a result of above disallowance of a portion of contract cost, contractor is liable to pay additional profit petroleum of USD 195,341,957 to the Government for period upto the 2013-14.

The possible alternatives for affecting the recovery of additional profit petroleum from the contractor are being worked out.

The contractor of the block has invoked arbitration on this issue.

Contractor has not drilled the required number of gas producer wells in D1 & D3 fields in line with the Addendum to Initial Development Plan (AIDP) approved by the Management Committee (MC) which has resulted in shortfall in production of gas vis-à-vis production estimates under the approved AIDP from D1 & D3 fields of block KG-DWN-98/3.

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Budgetary Support to IOCL for Financing PCPIR

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Rajya Sabha in a written reply today that as per information provided by Department of Chemicals and Petrochemicals, no budgetary support has been provided to Indian Oil Corporation Limited for part financing the capital cost of Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR).

Foreign Direct Investment (FDI) proposals pertaining to Petrochemicals and Chemicals are permitted up to 100% under FDI policy. No separate fast track provisions are there for FDI proposals for PCPIR.

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Benefits to OMCS Due to Skewed Pricing Mechanism

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Rajya Sabha in a written reply today that the Public Sector Oil Marketing Companies (OMCs) have contributed towards under recoveries and paid income tax and dividend to the Government of India. It is also pointed out that the profit as a percentage of turnover of OMCs is around 1% which is barely enough to meet their fund requirements for modernization and upgradation.

Refining is a cyclical industry characterized by very volatile prices. Providing some level of protection and thereby adequate refining margins is necessary for encouraging investment in expansion, and more importantly in modernization of our domestic refineries. Failure on this count can impede our quest for energy security. Further, many of the public sector refineries are very old (built between 1901 to 1985) and located in sub economic zone (such as the North-East refineries) with low economic of scale and therefore often have very low GRMs.

As per the recommendations of the Rangarajan Committee 2006, the Refinery Gate Price of Petrol and Diesel is based on Trade Parity Pricing (TPP). Accordingly, OMCs procure diesel at Trade Parity Price (TPP) from public and private sector refineries.

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