India-Oil-Control
India Friday said it would not follow the Russian model of `Resource Nationalization' as confining oil and gas reserves to public sector can breed inefficiency through sub-optimal utilization of resources.
In most of the (P)Gulf nations, state-run firms own and operate oil and gas fields.
Russia, which had allowed global energy giants to look for oil and gas, too has lately been `seizing' control of its vast fuel reserves.
"National oil companies globally breed inefficiency.
(Rather) we want more (private and foreign) investment and open up the sector," Petroleum Secretary M S Srinivasan said at the CII Distinguished Lecture Series here.
There were talks of `Resource Nationalization' in small sections after the recent giant gas finds by Reliance Industries and Gujarat State Petroleum Corp and oil discovery by Cairn so that the new reserves can be put to "public good."
"Unless investment and technology can flow freely, the resource utilization will remain sub-optimal," he said.
He came down heavily on Indian public sector oil firms for not doing enough for the energy security of the country.
Oil and Natural Gas Corp (ONGC), India's largest oil producer, was criticised for maintaining recovery rate at 28-30 per cent when globally oil majors were reaching 40-45 per cent recovery from the fields.
Oil marketing companies - IOC, BPCL and HPCL - came under attack for building duplicate and unnecessary assets in the name of expansion.
"At least 30 per cent assets of OMCs could be easily cut-off without impairing efficiencies," he said, adding PSUs paid little or no attention to cost cutting.
"There is tremendous scope for cost-cutting in public sector oil companies. There is lot of duplication and assets building without economic justification," Srinivasan said calling on state oil firms to do much more in cutting cost.
Citing examples, he said 200 billion cubic meters of natural gas the world over is flared.
"The gas flared is more than six times India's current gas output of 33 bcm. Two-third of the gas flared worldwide is from fields in Russia, Iran, Nigeria and Venezuela."
"Enormous quantities are wasted," he said, adding the public sector companies should benchmark themselves against global majors in operational parameters and technology.
Criticizing ONGC for not doing enough on technology induction, he said, "The recovery factor of 28 per cent was a cause of discomfort." The low recovery factor, he said, was due to ONGC's reluctance to go for best technology and forging partnership with foreign partners.
"We are in dialogue with ONGC and have asked them to have a care-look at the terms offered to private and foreign companies for bringing marginal fields on production so as to attract more technology strong companies."
Srinivasan said while oil marketing companies had built lot of `inefficient' assets in their retail expansion sphere, upstream exploration firm ONGC should stick to its core competency of exploring oil.
"We want ONGC to focus on its core upstream business and operating it in more efficient and effective manner," he said.
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