Oil and Gas Sector Current Affairs

Government to set up think tank for oil sector

The Union Government will soon get Cabinet approval for setting up of high-powered think tank under Ministry of Petroleum to look into key issues related to oil and gas sector. Besides, Petroleum Ministry also has send proposal to Union Cabinet for setting up domestic gas trading hub to adopt better mechanism for price discovery of both domestic as well as imported gas.

Internal think tank

The think will give advice on technology, setting up a gas network, attracting more FDI in sector, reducing India’s oil imports by 10%, and developing innovative new models of financing projects. The members of think tank will include ICICI Bank MD and CEO Chanda Kocchar, New Development Bank (NDB) chief K.V. Kamath, former Chairman of 13th Finance Commission Vijay Kelkar, top officials from oil and gas majors from across world and officials from Ministry of Petroleum and Natural Gas.

Domestic gas trading hub

Currently, price of natural gas in country is determined through a government-mandated formula that links the local price to rates prevailing in gas-surplus nations. However, long-term contracts for gas import are linked to crude oil.

 

Domestic gas trading hub will help to move gradually towards transparent price mechanism determined through gas trading hub. It will help to reaffirming India’s resolve to cut carbon intensity of its GDP and increase gas use in energy mix to 15% from the current 6.5% where India lacks much behind world average of gas use in total energy consumption 24%.

Background

India imports almost 60% of its petroleum requirements. Currently, price of natural gas in country is determined through government-mandated formula that links local price to rates prevailing in gas-surplus nations. However, long-term contracts for import of gas are linked to crude oil.

India is planning to shift towards gas-based economy, reduce greenhouse emissions and cut oil import. Governing is doubling its network of pipelines to transport natural gas to 30,000 km within next three-four years for shifting to gas-based economy.

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Cabinet approves Bilateral Investment Treaty between India and Belarus

The Union Cabinet has approved signing and ratification of Bilateral Investment Treaty (BIT) between India and Belarus on Investments. The Cabinet also approved Memorandum of Understanding (MoU) signed between India and Belarus in oil and gas sector.

Bilateral Investment Treaty (BIT)

The BIT will increase investment flows between two countries. It is also expected to improve the confidence of investors resulting in increase in FDI and Overseas Director Investment (ODI) opportunities. It will also have positive impact on employment generation.

The signing and ratification of BIT will work as strategic initiative for India as Belarus is member of Eurasian Economic Union (EAEU). India has already initiated BIT text with Kyrgyz Republic and is in talks with Russia for new BIT which are members of EAEU based on Model BIT text released in December 2015.

MoU in oil and gas sector

Under it, both sides will work towards establishing cooperation in areas of upstream and downstream activities, capacity building, enhanced oil recovery, technology transfer and development of mature fields in India. It is envisaged to enhance the economic and commercial cooperation between two countries in oil and natural gas sector. It will also promote bilateral relationship between India and Belarus.

India-Belarus Bilateral Relations

India’s relations with Belarus are traditionally warm and cordial. India was one of first countries to officially recognize Belarus as independent country in 1991. Bilateral relation between both countries is marked by broad understanding on issues of mutual interest.

Cooperation in science and technology and defence is important aspect of India-Belarus bilateral relations. Two-way bilateral trade amounted to US$ 402 million in 2016. The trade balance remains in favour of Belarus primarily on account of imports of Potash. Belarus has been supportive of India’s candidature for permanent seat at UNSC. Belarus also supported India at NSG meeting in Seoul in April 2016.

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