On May 11, 2020, The ministry of petroleum and natural gas has set up a 6 member panel to review the existing Production Sharing Contracts (PSCs) due to the fall in crude oil prices and the COVID-19 lockdown.
Gist about the committee
It is a Public Sector Undertakings(PSU)-Director General of Hydrocarbon(DGH)-dominated panel & there is no representation from the private sector, industry bodies, and from top bureaucratic circles. So it has to be seen how fast the suggestions will turn into decisions
Need
As there is a fall in oil and gas price, there is a need to find ways of attracting investment in exploration and production of oil and gas.
Scope
It includes suggesting methodology for increased production and activities and changes required in the existing policies
Members
Includes Yash Malik, advisor to the ministry of petroleum; Sanjay Chawla ED of Oil and Natural Gas Corporation(ONGC); A R Patel, advisor(finance) of DGH; KS Shaktawat former DGH official; Joydev Lahiri from Oil India, and M B Doja from the geology department of ONGC.
Key Points
i.The pandemic has reduced the activities & decreased the global energy demand, which result in excess supply and low prices. The lower price regime depresses the profits of domestic producers.
ii.On the basis of industry estimates, the domestic producers save the country over Rs 1.7 trillion annually with their production and consequent reduced imports.
iii.The natural gas selling price for the period starting from April 1, 2020, came down to USD 2.39 per million British thermal units(mbtu) from USD 3.23 a unit.
iv.Recently the price of Brent crude was seen at USD 30.97 a barrel at one point.
v.The dip in international prices is positive for India as it’s import dependency in 2019-20 was around 85%, up from 83.8 % in 2018-19.
vi.Due to low prices, the import bill also dropped from USD 111.9 billion in 2018-19 to around USD 102 billion in 2019-20.
About Brent Crude:
One of the most popular traded grades is Brent North Sea Crude (commonly known as Brent crude) originating from oil fields in the North Sea between the Shetland Islands and Norway. It is light and sweet(as sulphur content is less than 1%) which makes it ideal to refine into gasoline.
About ONGC:
Head of Co-ordination– New Delhi, India
Chairman & Managing Director(CMD)– Shashi Shanker
Minister of Petroleum and Natural Gas & Minister of Steel– Dharmendra Pradhan
