PwC India today unveiled an assessment of the oil and gas exploration and production industry in India. The report titled ‘It’s our turn now: E&P partnership for energy security’ undertakes an independent analysis of ‘why and how’ it is possible to put in efforts to unlock India’s hydrocarbon potential and achieve self sufficiency. According to the report the economic benefits that could result if India becomes import-free today is equivalent to more than a whopping 6.5% of India’s current GDP. If 50% of the domestic requirement is met by home production it is likely to generate an additional value of 47.2 billion USD, as per the report. In this scenario, 3.7 million person years of employment too can be generated over a period of 20 years.
The report suggests ways of achieving energy security by bringing onboard an effective partnership of the central government, the national oil companies, the private and inward investing companies, the service companies and the state governments.
Sharing his views on the report Deepak Mahurkar, Leader Oil and Gas, PwC India said, “Energy security is compelling for the economic advantages which it brings and today we need a debate on the critical energy sector in India with the hope of arriving at a clear consensus on what should ideally shape the exploration and production sector. Energy security is no longer just a desire but a critical imperative for India as it stands at the threshold of economic maturity.”
Oil imports in 2011-12 accounted for almost 50% of India’s total exports. PwC analysis states that 54% of the country’s trade deficit was due to the oil trade deficit. This fuelled a substantial weakening of the Rupee and resulted in a drawdown of foreign exchange to the tune of 12.8 billion USD. The drawdown could have been avoided had India produced 17 million tonnes over its current domestic production, according to the report.
The report states among its key insights, for accomplishing energy security, developing the services sector in India would be rewarding since this would help avoid delays and premiums for obtaining E&P services. More than 60% of the E&P spend is for specialised services, they form the backbone of the E&P industry. Along with this finding, the report also points to another – significant benefits would accrue to state governments by developing the E&P sector. Rajasthan transitioned from a revenue deficit state into a revenue surplus one in 2010-11 on the back of the Barmer facility which was commercialised in late 2009 and Gujarat too has immensely benefited from sector supplies.
In addition to the economic benefits, self sufficiency can generate an additional inflow for the government of an amount equivalent to almost 25% of the current total revenues that accrue to the government from the petroleum sector.
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