Not cancelled any long-term contract for LNG or crude oil: Dharmendra Pradhan

May 15, 2020 12:57 pm

Indian energy companies have deferred some cargoes and spot bookings but not cancelled any long-term contracts for procuring Liquefied Natural Gas (LNG) or crude oil supplies, oil minister Dharmendra Pradhan said.

In a conversation with Daniel Yergin, Vice Chairman of research and consultancy firm IHS Markit, Pradhan said India has 5.3 million tonne (MT) of strategic storage capacity. “By mid-May it will be full. Apart from that, our companies have 7 MT of floating oil in their contracts. We have booked them, we have purchased them. With our domestic online capacity in crude oil or products we have storage of around 25 MT,” Pradhan said.He added India has around 38 MT of product and crude oil storage facility which is 18 per cent of the country’s annual energy requirement. Talking about the impact of Covid-19 on India’s oil and gas industry, the minister said Indian refiners are currently grappling with reduced demand and inventory losses.

“A few weeks back we decided to start our economic activities, transportation activities, industrial activities in the rural areas of the countryside and gradually we are edging out from the lockdown. Our demand is picking up,” Pradhan said.

He also said the government is going to unveil a new natural gas policy, a new gas tariff policy and soon announce a natural gas trading hub. Pradhan also said the government is focused on the plan to implement the city gas distribution network expansion.

“It will give two things. One, it will create a long-term futuristic energy infrastructure in the majority of the country and, two, at this juncture we need more job opportunities, more employment generation and this is a perfect plan for our gas expansion story,” Pradhan said.

The minister also expressed confidence domestic production will gain priority as demand picks up and the government expects investments to come in the country’s upstream sector due to the recent policy reforms.

Pradhan highlighted that low oil prices is not a solution for achieving energy security and while India is one of the largest consumers of crude oil the current market situation requires oil prices to be reasonable and sustainable for both oil producing and consuming countries.