Petroleum sector to see policy continuity, will build on work done in recent years: Hardeep Singh Puri

In an interaction with reporters after taking charge as the petroleum minister on Tuesday, Puri identified five key segments that are likely to see additional thrust from his ministry. These are: oil and gas exploration and production, refinery and petrochemicals, natural gas, biofuels, and green hydrogen.

India is a major energy consumer and its demand is rapidly rising. India is the world’s third-largest consumer of crude oil but depends on imports to meet over 85 per cent of its requirement. The country is also a large consumer of natural gas with an import dependency level of around 50 per cent. Raising domestic output of oil and gas has been a key priority of the government to reduce reliance on costly energy imports.

Puri said that two rounds of auction of new oil and gas blocks are expected over the next few weeks, and the government will also be encouraging upstream oil and gas companies to focus on enhancing output from ageing fields by collaborating with international players with expertise in technical services for the petroleum sector.

Over the past couple of years, purchase of discounted crude from Russia has helped Indian refiners in slightly softening the impact of extreme price volatility in global energy markets. On being asked if public sector refiners are looking to ink term deals with Russia for cheaper oil purchases, Puri said that they are looking at Russia and even other suppliers for cheaper oil.

While private sector refiners Reliance Industries and Nayara Energy have reportedly inked term deals with Russian suppliers, state-owned Indian Oil Corporation (IOC) has not yet renewed last year’s term deal. Other public sector refiners did not have a term deal for Russian oil even last year. Most of the Russian oil that is imported into India is bought from the spot market, which is more prone to volatility than term purchases.

Given the fast-paced growth in demand for petroleum fuels and petrochemicals, the government and state-owned refiners have been implementing refinery and petrochemical capacity expansion—brownfield as well as greenfield. Puri announced on Tuesday that state-owned Bharat Petroleum Corporation (BPCL) is planning to set up a greenfield refinery, whose configuration, capacity, and location are still to be decided. The government wants India’s refining capacity to increase to 450 million tonnes per annum (mtpa) from the current level of around 250 mtpa by 2030.

On the green hydrogen front, Puri listed various initiatives like setting up of production units and pilot projects on using green hydrogen as a fuel that are being executed by public sector companies under the MoPNG. These companies have been working to develop a green hydrogen ecosystem in India with an aim to make the country a global production and export hub for what is seen as a zero-emission fuel with massive potential to change the global energy landscape. The efforts, including pushing for localisation of the equipment supply chain and domestic manufacturing of electrolysers, are expected to only get accelerated over the coming years.