The Hindu : Business : Enough in forex kitty to manage oil imports: Aiyar

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Tuesday, Mar 08, 2005

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Enough in forex kitty to manage oil imports: Aiyar

By Our Special Correspondent

The Union Minister for Petroleum and Natural Gas, Mani Shankar Aiyar, at an interactive meet on building partnerships for upstream oil and gas in New Delhi on Monday. — Photo: Kamal Narang

NEW DELHI, MARCH 7. The Union Petroleum Minister, Mani Shankar Aiyar, today expressed the hope that the unprecedented rise in crude oil prices would stabilise soon with the coming in place of the new U.S. administration. While he was concerned over the burgeoning oil prices, he said India fortunately was in a position to withstand these high prices owing to its high foreign exchange reserves.

Addressing a conference on oil and gas conference organised by the Confederation of Indian Industry (CII), he noted that with foreign exchange reserves of $135 billion, the country was better positioned to deal with high oil prices. "In a sense, we can afford to pay the high price,'' he said.

He also noted that there was no rationale behind the rise in oil prices as there was no drop in oil production due to the political crisis in Iraq or Nigeria. Even the imprisonment of an oil baron in Russia was not the reason, as was conjectured, behind the rise in oil prices, he said. He also pointed out that Venezuela now had a stable political regime and therefore attributed the rise in oil prices to speculative activity and the U.S. elections.

Mr. Aiyar recalled that last year was an election year in the U.S. and the large trade and budgetary deficit had sparked a reaction in the oil market. He felt that with the new U.S. administration in place along with the end of winter demand, oil prices would cool down soon and provide stability to the market. He indicated that the freeze in prices of petrol and diesel could end in April as stability in global crude oil prices would also lead to a relatively stable domestic oil pricing regime.

On the enormous potential for striking oil in this country, he said India has 30 billion tonnes of unexplored hydrocarbon reserves. Inviting international firms to explore for oil and gas, he said this was no longer a hydrocarbon poor country after the recent spate of oil and gas discoveries. He said the offshore Cauvery, Krishna Godavari and Mahanadi basins in the Bay of Bengal held promise while on the west coast, the Kerala-Konkan basin was also promising. Outlining the incentives available for foreign oil companies in this sector, he said 20 oil and gas blocks had been put on auction in the fifth round of bidding under the New Exploration Licensing Policy (NELP). Besides the 20 blocks, the Oil and Natural Gas Corporation (ONGC) would offer stakes in five deep sea blocks — three in the Krishna Godavari basin and one each in Kerala Konkan offshore and Gujarat Kutch offshore.

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