Economy to grow five-fold by 2040, quotes FICCI representation on reforms required for a transition to gas based economy

New Delhi [India], Jan 19 (ANI): Indian economy is poised to grow five-fold by the year 2040. Hydrocarbons will continue to play an important role in this growth story. This is also important that we increase our domestic oil and gas production to reduce overdependence on oil imports. While delivering the inaugural address at PETROTECH 2016, Prime Minister Modi said, "I have to set a target to reduce import dependence by ten percent by 2022. This will have to be achieved during a period of increasing oil consumption." He also stated that his government accords high priority to move towards a Gas Based Economy and efforts should be made to increase domestic production. There is a need to increase the share of natural gas from current level of seven percent closer to the global average of 24 percent. Promoting gas is not only beneficial for the environment but will also give fillip to domestic E&P activity and attract greater investment. While analysts are predicting a golden future for the gas sector globally, development of the gas industry in the country is being stymied by current distortions in the pricing of gas. FICCI has given a representation In this regard to Dharmendra Pradhan, Minister of State (I/C) for Petroleum and Natural Gas, Govt. of India yesterday on reforms required for a transition to a Gas Based Economy. FICCI has stated in the letter that pricing of domestically produced gas is significantly lower than the levels that are necessary to give domestic gas producers fair return to cover their risk capital involved in E&P business. The current gas (notified) price at USD 2.50 / MMBTU is considerably lower than the prevalent oil prices (it works out to about USD 15 per barrel in oil equivalent terms). The recent surge in spot LNG prices has given an ample indication that period of ultra-low energy prices are about to be over. Prevalent gas prices in India are grossly inadequate to cover operating expenses in some cases. FICCI has suggested that it would therefore be prudent to align domestic prices on an import parity basis, as in the case of crude oil. Also, there is a need to relook at the rationale for the level at which ceiling gets fixed. This is also to be noted that a large part of domestic gas production comes from matured gas fields and further investments are needed to keep them in working and productive conditions. The investment becomes unproductive at present pricing. FICCI has been for long arguing that in the national interest and in the interest of ensuring energy security, offering remunerative natural gas prices to the domestic gas explorers and producers is the need of the hour. Such a price regime will bring in the much-required technology and risk capital to tap nearly 2/3rd of the unexplored resources, majorly lying in the deep and ultra-deep basins. This will also help in realizing the vision of the Prime Minister of a speedy transition to a Gas Based Economy. (ANI)