New Delhi: The government is planning to incentivize energy firms to explore and produce natural gas domestically by extending them similar fiscal incentives currently available to only crude oil production, President Pranab Mukherjee said on Monday.
"The government is working towards extending fiscal incentives similar to those provided for exploration of oil to all forms of natural gas exploration and exploitation," Mukherjee said on Monday while inaugurating Petrotech conference. Currently, India provides tax incentives on crude oil production but similar fiscal concession is denied to gas producers.
President said the policy change is in tune with rapidly changing hydrocarbons sector where share of gas has increased because of commercial development of coal bed methane, shale gas, underground coal gas and gas hydrates.
Mukherjee said the natural gas use is expected to increase in years to come and stressed on the need to connect various parts of India with gas pipelines so that economic benefits of natural gas reach to all. "Government of India is also currently extending full support to companies acquiring overseas oil and gas assets and imports of LNG (liquefied natural gas). It would, in this context, be necessary to accord due priority to the development of a countrywide gas pipeline transportation infrastructure," he said.
President said discoveries of new oil and gas reserves in the recent past in India had been encouraging. "Government of India's New Exploration Licensing Policy launched in 1997-98 has seen investment of over $14 billion and has resulted in 87 oil and gas discoveries. Nelp has all the ingredients of a favourable investment climate, fiscal stability, transparency of the rule of law, contract stability, minimal policy induced uncertainties and a stable legal and regulatory framework," he said.
The refining sector in India, too, has witnessed a silent revolution, he said. "India has, over the years, developed into a major export hub. With a refining capacity of 215 million metric tonnes per annum, exports of petroleum products have now crossed 60 million tonnes, fetching revenue of close to $60 billion. It has emerged as the single largest component of merchandise exports from India," he said.
Mukherjee also gave advice to the oil and gas industry. "I expect the domestic oil and gas industry to place sustainable development at the core of its business decisions. This means placing safety, environment, and community interest at the centre of its policies," he said.
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