Lok Sabha Question No. 428 (UNSTARRED), answered on 2017-12-18
Subject: Production and Distribution of Petroleum Products
Ministry: PETROLEUM AND NATURAL GAS
Asked by: RAMDAS CHANDRABHANJI TADAS, JOSE K. MANI, JAYSHREEBEN  PATEL, INNOCENT, R. PARTHIPAN

## LOK SABHA

## UNSTARRED QUESTION NO. 428

## TO BE ANSWERED ON 18.12.2017

## PRODUCTION AND DISTRIBUTION OF PETROLEUM PRODUCTS

## 428.     SHRI RAMDAS C. TADAS:

SHRI JOSE K. MANI: SHRIMATI JAYSHREEBEN PATEL: SHRI INNOCENT: SHRI R. PARTHIPAN:

Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

## isVªksfy;e vkSj izkd`frd xSl ea=h

(a) whether the Government has any proposal to set up a domestic gas trading hub to adopt a better mechanism for gas pricing and constituted any think tank to streamline the production and  distribution of petroleum products;

(b) if so, the details thereof along with steps taken to create an internal think-tank in moving towards a gas-based  economy  including  the  jurisdiction,  aims,  objectives,  key  focus  areas  and  methodology proposed to be adopted by the said think-tank to achieve the same;

(c)  the  concrete  steps  taken  by  the  Government  to  make  India  a  gas-based  economy  and  its  likely impact on petroleum and natural gas production and its prices along with the expenditure likely to be incurred thereon;

(d)  the  salient  features  of  the  existing  formula  to  determine  the  price  of  natural  gas    produced  by public/private  sector  companies  in  the  country  along  with  number  of  times  price  of  natural  gas  has been revised so far;

(e) whether the cases of disputes between the natural gas producing companies and the Government on determining the prices of gas have come to the notice after the revised gas price formula and if so, the details thereof, company-wise along with the present status of such disputes;

(f)  whether  the  Government  has  maintained  a  balance  between  the  profitability  of  the  companies producing natural gas and insulate common man from undue burden of rise in prices of natural gas after revision of the said formula and if so, the details thereof and the steps taken in this regard; and

(g) whether Upstream  Companies have requested the Government to double the price of natural gas to help  them  produce  gas  without  suffering  any  losses  and  if  so,  the  details  thereof  along  with  the corrective steps taken/being taken by the Government in this regard?

## ANSWER

## पेट्रोल ियम और प्राक ृ तिक गैस मंत्री ( श्री धमेन्द  र प्रधान)

## MINISTER OF PETROLEUM & NATURAL GAS (SHRI DHARMENDRA PRADHAN)

(a)  &  (b): The Government of India proposes to set up a Gas Trading Hub/Exchange as one of the steps  to  usher  into  a  gas  based  economy.  A  High  level  Committee  has  been  set  up  to  examine  the following issues in details:

- (i)     Preparation of an Action Plan to create synergy among R&D Centres of Oil PSUs;
- (ii)    Tax issues & ways to benefit from GST by the Oil PSUs (Public Sector Undertakings;
- (iii)    Synerzising activities of training Centres of Oil PSUs;
- (iv)   Merger, acquisition & consolidation of Oil PSUs & the JVs (Joint Ventures)
- (v)     Need & possibility of formation of a new entity dealing with oil services and supply of qualified manpower to oil sector around the world.

Further, Oil Industry and Development Board (OIDB) has been entrusted to engage a consultant for carrying out a detailed study on the current state of Indian Gas Sector, Government priorities and to recommend further course of action for establishment of a Gas Trading Hub/Exchange in the country.

- (c):   In order to make India a Gas Based Economy, the Government has put the thrust in increasing the availability  of  natural  gas  by  enhancing  the  domestic  gas  production,  encouraging  the  import  of Liquefied  Natural  Gas  (LNG),  completion  of  national  gas  grid  and  speedier  roll  out  of  City  Gas Distribution (CGD) network in the country.
- (d):  The Government of India has notified the New Domestic Natural Gas Pricing Guidelines 2014. The price  of  domestically  produced  gas  determined  under  said  guidelines  is  linked  with  global  gas markets viz. Henry Hub(HH), National Balancing Point(NBP), Alberta Hub and Russia. So far since November, 2014 the prices of domestically produced gas have been revised seven (07) times.
- (e):  Contractors of Block KG-DWN-98/3 issued notice invoking arbitration in May 2014 challenging Government of India's decision of deferment of domestic natural gas pricing guidelines 2014. But later on, contractors withdrew the notice. At present there is no dispute on the determination of prices of gas.
- (f)  & (g):  Through the New Gas Pricing Guidelines 2014, Government has tried to maintain a fine balance  between  the  interest  of  gas  producing  and  consuming  sectors.    However,  to  incentivize domestic production of natural gas, Government while approving the gas pricing formula, approved a provision for grant of premium for new discoveries made in Deep water, Ultra Deep water and High Pressure High Temperature reservoir for which Government notified a policy on 21.03.2016 to grant marketing including pricing freedom with a cap on the price to the discoveries. Government has also provided marketing and pricing freedom for the sale of produced crude oil and natural gas from the discovered small fields. Government also approved marketing freedom for oil and gas to be produced from the block /field to be offered under Hydrocarbon Exploration and Licensing Policy (HELP).

*****