Domestic crude our only saviour. - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Domestic crude our only saviour.

Jul 3, 2000

The oil import bill of India has ballooned YoY, following the sharp rise in petroleum imports & prices. The major contributor to the import bill is crude oil as a large part of the petro–product imports has been replaced by domestic production. In fact, India now is an exporter of petrol, naphtha and diesel. The setting up of the 27 m tonne refinery by Reliance Petroleum (RPL) has contributed significantly to this trend. The sharp rise in crude prices without the corresponding increase in petro-product prices has adversely impacted the oil pool account (OPA). It is imperative that we increase domestic production if are to reduce our dependence on crude imports. This will have multi-fold benefits for India.

  • It will reduce the impact of oil shocks as witnessed in the 70’s and early 90’s.
  • The trade deficit will be greatly reduced as oil imports represent 20% of India’s import bill.
  • It will save our precious foreign exchange reserves.

However, it seems that these benefits have not been very evident to the Government. India’s performance in exploration & production (E&P) has not been very encouraging post liberalisation.

The Government it seems has finally taken cognisance of this fact of increasing domestic production. It has directed Oil & Natural Gas Corp. (ONGC) to draw up an oil recovery plan based on highest yield, quickest recovery and lowest cost. It has framed the New Exploration Licensing Policy (NELP), under which returns are based on market determined prices. This initiative is mainly to attract the international majors.

The ONGC has been allotted six deep water exploration blocks under the NELP. However, due to Government delay it has not been able to tie up with international majors. The Government has also been slow of the blocks in tendering the remaining oil fields. With crude oil prices remaining firm this is an opportune time to attract private investments in E&P as the viability of the field improves with increase in crude prices. It would benefit both the Government and private investors should the Government put the fields on the block.

Equitymaster requests your view! Post a comment on "Domestic crude our only saviour.". Click here!

  

More Views on News

5 Green Energy Stocks to Watch as India Readies for a Revolution (Views On News)

Oct 13, 2021

The excitement around green energy stocks has opened up a huge contrarian opportunity in the traditional energy space.

Top Performing PSU Stocks over the Past One Year (Views On News)

Oct 1, 2021

After a decade of underperformance, PSU stocks have woken up. Here are the best performing PSUs of past twelve months.

Linde India Shares Hits New High. Up 230%+ in One Year (Views On News)

Aug 26, 2021

Linde India shares have surged sharply in the past few trading sessions. What's causing the rally?

ONGC Logs Massive Jump in Net Profit as Crude Oil Prices Double (Views On News)

Aug 16, 2021

Rising crude oil prices compensate ONGC's fall in production.

HPCL Shares Under Pressure After Profit Declines in June Quarter (Views On News)

Aug 5, 2021

Rising crude oil prices and forex woes weigh on HPCL's quarterly numbers.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

5 Indian Companies Embracing Blockchain Technology (Views On News)

Nov 23, 2021

Blockchain adoption in India was slow in the past. Now, the technology is being well received.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE OIL & GAS


Dec 6, 2021 03:22 PM

S&P BSE OIL & GAS 5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS