India should buy overseas oil and gas assets aggressively: Oil Min Dharmendra Pradhan

With global oil prices halving, India should aggressively scout for acquisition of oil and gas assets abroad, create strategic reserves and step up domestic exploration, Oil Minister Dharmendra Pradhan said.

Opportunities emerging from low oil prices were discussed at a meeting called by Prime Minister Narendra Modi with business leaders, bankers and bureaucrats on Tuesday, against the backdrop of global economic turmoil, he said.

Aggressive overseas acquisitions, building strategic oil reserves, stepping up domestic exploration and tying up supplies on favourable terms were some of the suggestions that came up at the meeting, Pradhan told PTI.

India, which is 80% dependent on imports to meet its oil needs, is a direct beneficiary of oil prices slumping from $115 per barrel to under $50 in last one year.

Besides cutting its oil import bill, lower oil prices have also helped cool inflation and cut government's subsidy bill.

"It was felt at the meeting that low oil prices present an opportunity which India must capitalise on," he said.

Participants at the meeting suggested that India aggressively buy oil and gas fields abroad as low oil prices has not just brought down valuation of assets but also led to distress in some others that had borrowed huge funds when oil rates were high.

State-owned Oil and Natural Gas Corp (ONGC) last week agreed to buy 15% stake in Russia's second biggest oil field of Vankor from Rosneft for $1.268 billion as Moscow looked to cut risks in low oil price regime.

Pradhan said participants also felt that India should use the low oil prices to stockpile oil at near complete underground strategic storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka. Also the capacity should be raised from 5.33 million tons to guard against crude price shocks and supply disruption.

India, world's fourth largest oil consumer, should also tie-up supplies from producers in Middle-East, Africa and Latin America on favourable terms, he said.

Low oil prices have also led to slump in cost of associated services like drilling rigs, which should be taken advantage of for increasing domestic exploration and production (E&P) activities, he said adding more wells should be drilled to find new reserves.

"We received constructive suggestions, which the government is working on," Pradhan said.

Modi at yesterday's meeting urged Indian industry to take risks and make investments for the good of the nation.

The meeting took place amid China's slowdown threatening to drag down global growth and investor concerns over the possibility of the US Fed raising interest rates. Indian stocks and currency are among the worst hit in Asia since China devalued the yuan last month.

India, which had in January-March overtaken China to become the world's fastest-growing major economy, saw its GDP slow to 7% in the April-June quarter. The growth rate puts it on par with China as the world's fastest-growing major economy.

Modi had last year set a target of cutting India's oil import dependence by 10% to 67% by 2022. The target was set keeping in mind the 77% import reliance in 2013-14. Import dependence has since risen to 80%.

Jaitley said that expansion of banking, introduction of payments banks and other schemes, which are being considered by the government were aimed at brining in all the resources into the banking system.

"I must tell you with great sense of discomfort that I have delegations coming to me saying please go easy on domestic black money because this is at least adding to economic activity. Now, no economy can indefinitely sustain an argument of this kind," he said.

On whether the tough stance on black money is hurting the real estate, he said, "the construction sector went slow because of economic reasons, there may be other reasons, land can be a reason, interest can be a reason..." Answering questions on the implementation of Goods and Services Tax (GST) from April 2016, Jaitley said, "the date today doesn't seem to be under my control because of obstructionism of Congress, but hopefully sooner or later it will be passed and we will have a much easier indirect tax regime."

Although the government has proposed to roll out the GST from April 1, the amendment to the Constitution Amendment Bill is being held up because of political logjam in the Rajya Sabha where the ruling NDA does not have a majority.

He further said that it would be wrong to describe all tax demands as "tax terrorism".

"Nobody is happy to make large amount of taxes and therefore every tax demand is not tax terrorism. Most tax demands are legitimate. Out of about 3.5 crore people only 2 lakh accept these scrutinising reports. This new system that they (revenue department) are following is not coercive," Jaitley added.

Stressing that the government's taxation roadmap was very clear, Jaitley said, "we have substantially put the whole idea of retrospective taxation to rest. Government has no intention."

The government, he added, was trying to resolve all major taxation issues outside the judicial system barring one (Vodafone tax case) which would be resolved through the judicial process.

"Of the major legacies issues, only one or two are left. I do not see much time before they are put to rest. The instability in tax administration is now being slowly (resolved)," the minister said.