PM Modi asks Indian energy companies to become MNCs

NEW DELHI, INDIA: Pushing Indian energy companies to become multinationals, Prime Minister Narendra Modi outlined a vision for creating energy corridors to the Middle-East, Central Asia and South Asia, declaring stable and reasonably-priced energy is key to economic development.

The world's third-largest energy consumer needs to raise domestic oil and gas production to cut imports as also establish partnership with regional energy powerhouses, he said while addressing the inaugural session of Petrotech conference 2016.

"Energy is a key driver of economic growth. Sustainable, stable and reasonably priced energy is essential for the fruits of economic development to reach the bottom of the pyramid," he said. "On one hand, to meet the increasing demand, we need affordable and reliable sources of energy. On the other, we must be sensitive towards the environment."

The Prime Minister said hydrocarbons will continue to play an important part in India's growth, but the country needs energy that is accessible to the poor as also efficiency in use and energy security.

"Energy in general and hydrocarbons in particular is an important part of my vision for India's future," he said adding that it rests on four pillars of energy access, efficiency, sustainability and security.

Stating that the country needs to increase domestic oil and gas production and reduce import dependence, he said, "I have set a target to reduce import dependence by 10 percent by 2022. This will have to be achieved during the period of increasing oil consumption."

Hardselling a strong, investment-friendly policy framework to boost domestic hydrocarbon production, Modi said a new hydrocarbon exploration and production policy has been introduced to provide for uniform license for exploration and production for all forms of hydrocarbons, including shale oil and gas and coal bed methane.

This also covers open property policy allowing bidders to choose the land they wish to explore, revenue sharing model instead of profit sharing to reduce any scope for disputes and marketing and pricing freedom for crude oil and natural gas produced.

He attributed the $5.6 billion investment in Russian oilfields that will provide 15 million tonnes of equity oil equivalent, to a proactive foreign policy and energy diplomacy.

"I hope that our oil and gas sector companies will take the opportunity to tie up with their foreign counterparts to explore for more equity oil. Indian energy companies must become multinational and work towards India-Middle East, India-Central Asia, and India-South Asia energy corridors," he insisted.

He called on global hydrocarbon companies to come and Make in India. "Our constant efforts have improved India's ranking in Ease of Doing Business. Let me assure you that our commitment is strong and our motto is to replace red tape with red carpet."

Stating that hydrocarbons will remain the most important source of energy for many years to come, the Prime Minister said India is poised to account for one fourth of the incremental global energy demand between 2013 and 2040. It is expected to consume more oil in 2040 than the whole of Europe.

India, he said, is the world's fastest-growing large economy today and is expected to grow five-fold by 2040.

For good measure, the Prime Minister put the spotlight on India's resilience to global headwinds. "Apart from fast growth, our economy has also been more stable than most others. While the global economy is going through a period of uncertainty, India has shown tremendous resilience," he said.

In civil aviation, India is the eighth largest market in the world and set to become the world's third largest by 2034. Growth in the aviation sector is expected to raise demand for aviation fuel four times by 2040. All this will impact energy demand, he said.

For energy access, the government has launched the Ujjwala programme to provide 5 crore families free LPG connections and provide piped cooking gas to 10 million houses in the next five years, he said.

Capital investment in the railways has been more than doubled, dedicated freight corridors built, high speed rail corridor conceptualized and waterways provided focus for energy efficiency, he said.  

While developing, countries know sensitivity of energy pricing, India has de-controlled petrol and diesel prices and cooking gas price too is now determined by the market. "To protect the vulnerable and the middle class, a subsidy is paid directly to 169 million bank accounts. This has eliminated leakages and misuse of cooking gas subsidies, resulting in large fiscal saving. These measures too have increased the efficiency of energy use," he stated.

Modi spoke about India taking the lead in committing itself to a reduction of 33 percent in carbon intensity of its GDP from its 2005 level over the next 15 years and its commitment to produce 40 per cent of power from non-fossil fuel by 2030.

"I have set a massive target of 175 gigawatts of renewable energy by 2022. Thanks to our efforts, capacities have increased and prices of renewable energy have crashed," he added.

"Natural Gas is the next generation fossil fuel - cheaper, and less polluting. We have given priority to moving towards a gas-based economy. Efforts must be made to increase natural gas production while also creating import infrastructure to meet the growing domestic demand," Modi stressed.

The Prime Minister is of the view that natural gas will have an important balancing role as India's renewable energy output rises. "To provide balance, gas-based power will be critical," he highlighted.

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