Global crude oil price of Indian Basket was US$ 59.95 per bbl on 02.03.2015

The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 59.95 per barrel (bbl) on 02.03.2015. This was higher than the price of US$ 59.85 per bbl on previous publishing day of 27.02.2015.

In rupee terms, the price of Indian Basket increased to Rs 3706.11 per bbl on 02.03.2015 as compared to Rs 3698.13 per bbl on 27.02.2015. Rupee closed weaker at Rs 61.82 per US$ on 02.03.2015 as against Rs 61.79 per US$ on 27.02.2015.

The table below gives details in this regard:

Daily Crude oil price- 03.03.2015

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Budget proposals 2015-16 for Petroleum & Natural Gas sector

Various proposals have been made in the Budget 2015-16 which would lead to greater stability, clarity and continuity in the economy and the petroleum and natural gas sector.

Subsidies will continue so that there is no adverse impact on the general public. As stated by the Finance Minister, the Government is committed to the process of rationalizing subsidies and cut leakages, not cut subsidies. Adequate funds have been provided for LPG and kerosene subsidies. Finance Minister appealed to the well off strata, including those concerned for the welfare of the poor, to voluntarily give up subsidy on LPG.

In context of rationalization and targeting of LPG subsidy, it was highlighted that under DBTL Rs.6335 crore have been transferred to over 11.5 crore beneficiaries.

There is revision in specific rates of excise duty on petrol and diesel only to the extent of subsuming the quantum of education cess levied, keeping the total incidence of excise duty unchanged. Further, the effective rates of additional excise duty levied on petrol and diesel is proposed to be increased from Rs.2 per litre to Rs.6 per litre to fund investment in roads and other infrastructure to the extent of Rs.40,000 crore.

In order to ensure energy security in the country, strategic crude oil underground storage reserves of 5.33 MMT are being set up by Indian Strategic Petroleum Reserves Limited (ISPRL) at Visakhapatnam, Padur and Mangalore. An amount of Rs.2,400 crore has been provided under the Plan head in 2014-15 (RE) for filling crude oil in the caverns.

An amount of Rs.72589 crore is proposed to be allocated in 2015-16 as Plan capital expenditure by oil and gas Central public sector enterprises from the internal and extra budgetary resources (IEBR) of the companies for projects for exploration and production, refining & marketing, petro chemicals and engineering.

It has been proposed to reduce the rate of corporate income tax from 30% at present to 25% in the next 4 years. It is expected that this would lead to higher investment and growth in the sector.

In order to boost investment in infrastructure, a National Investment and Infrastructure Fund is being established. The PPP mode of infrastructure development would be revitalized. It is expected that this would invite investment for the petroleum and natural gas sector.

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Cess on Petroleum Products

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Lok Sabha in a written reply today that an Additional Duty of Customs and an Additional Duty of Excise are levied and collected as cess on Motor Spirit commonly known as Petrol under Section 103 and Section 111 of the Finance (No.2) Act, 1998, respectively. Also an Additional Duty of Customs and an Additional Duty of Excise is levied and collected as cess, on High Speed Diesel Oil under Section 116 and 133 of Finance Act, 1999, respectively.

The revenue collected is initially credited to the Consolidated Fund of India and thereafter, Parliament by appropriation credits such proceeds after adjusting cost of collection, to the Central Road fund (CRF). The CRF is thereafter distributed by Planning Commission amongst three Ministries i.e. Ministry of Rural Development, Ministry of Railways and Ministry of Road Transport and Highways in the manner prescribed under Section 10(viii) of the Central Road Fund Act, 2000.

Section 7 of the Central Road Fund Act, 2000 lays down that CRF shall be utilised for the –

(i) development and maintenance of national highways;

(ii) development of the rural roads;

(iii) development and maintenance of other State roads including roads of inter-State and economic importance;

(iv) construction of roads either under or over the railways by means of a bridge and erection of safety works at unmanned rail-road crossings; and

(v) disbursement in respect of such projects as may be prescribed.

The details of cess collected during the last three years as per the Receipt budget is as under:

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Shale Oil and Gas

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Lok Sabha in a written reply today that the shale boom helped US to produce nearly 15% of the global crude oil thereby significantly reducing its imports. The yearly growth of US crude oil production is around 1-1.2 MMB/D against the world demand growth of 0.8 MMB/D. The increase in oil and gas production in the United States of America is one of many possible factors helping in lowering of international prices of crude oil and spot prices of LNG. This has resulted in a lower crude oil import bill. This has also led to a reduction in prices of petroleum products like petrol, diesel, ATF, SKO, LPG, etc., thereby benefiting the consumers.

In order to explore/ assess the shale gas and oil potential in the country, the Government of India has on 14.10.2013 notified the Policy Guidelines for Exploration and Exploitation of Shale gas and Oil by National Oil Companies in the PEL/PML blocks allotted to them under the nomination regime. Under the first phase of assessment (3 years), ONGC and OIL have been granted permission to carry out shale gas and oil exploration and exploitation activities in 50 and 5 PEL/PML blocks respectively.

At present, the exploration of shale gas and oil is at a nascent stage. ONGC has drilled two wells and the third well is being drilled in the Cambay basin, Gujarat. In addition, ONGC has collected cores in prospective shale formations from another 9 wells.

Oil field chemicals used in upstream oil and gas industry can be classified as (i) drilling chemicals, (ii) processing chemicals, (iii) stimulation chemicals and (iv) water-injection chemicals. To handle such chemicals, there are standard operating procedures to take care of human safety and environment. Oil and gas companies follow International Organization for Standardization (ISO)/Occupational Health & Safety Advisory Services (OSHAS) standard and are certified for QHSE (Quality, Health, Safety and Environment).

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LPG Distributors/ Retailers in J&K

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Lok Sabha in a written reply today that Public Sector Oil Marketing Companies (OMCs) have reported that there is no shortage of LPG distributors/ retailers in the State of Jammu and Kashmir. The State/UT-wise number of total LPG distributors on record, customers and their ratio in the country including in the State of Jammu and Kashmir as on 01.02.2015 is at Annexure I.

Appointment of distributors is a continuous process and the locations for setting up LPG distributorships are identified based on available refill sale potential, that can be sustained economically. In terms of Consumer to Distributor ratio, J&K at 10,354 consumer/distributor is better placed than national average of consumer/distributor.

As on 01.02.2015, OMCs are having a total of 11272 Regular distributors and 4178 distributors under Rajiv Gandhi Gramin LPG VitaranYojana (RGGLVY), out of which 167 Regular & 36 RGGLVs are functioning in the State of J&K.

Further, OMCs have released advertisement in J&K for appointment of 56 Regular and 106 RGGLVs.

Several steps have also been taken by OMCs to improve customer services. This includes a comprehensive LPG service portal www.MyLPG.in, where all LPG services can be obtained from the comfort of the home without visiting the distributorship. Mobile applications have also been developed for various LPG services. In an effort to enhance competition, the distributors are being rated from 1 star to 5 star based on their delivery performance. The customers are also being given the option of portability under which they can now change their distributor/marketing company in case they so desire.

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Cash Subsidy Scheme for LPG

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Lok Sabha in a written reply today that Government has launched a voluntary initiative to encourage LPG consumers, who can afford to pay the market price for LPG to surrender their LPG subsidy.

As on 23.02.2015, 1.46 lac (approx.) LPG customers have opted out of subsidy. The State/UT-wise data as on 23.02.2015.

State/UT/OMC-wise details of number of registered active domestic LPG consumers as on 01.02.2015.

The quantum of subsidy varies from market to market on monthly basis. The subsidy amount in Delhi for the month of February 2015 is Rs 187.18 per 14.2 Kg cylinder.

Under the PAHAL Scheme, LPG consumers joining the scheme, will get the LPG cylinders at market price and receive LPG subsidy (as per their entitlement) directly into their bank accounts. All domestic LPG consumers have been given two alternatives in the scheme. If LPG consumer has Aadhaar number, he/ she will have to link it to his/ her LPG consumer number and bank account. Alternatively, he/ she can link his bank account directly to his LPG consumer ID. This alternative ensures that no LPG consumer is denied subsidy for want of Aadhaar number.

All LPG consumers who have not joined the scheme, will be given a grace period of three months from the date of launch to join the scheme. The scheme was launched in 54 districts on 15.11.2014 and in rest of country on 01.01.2015. During grace period such consumers will get LPG as per their entitlement at subsidized price. Additionally, a period of three months beyond grace period known as parking period is given to LPG consumers for joining the scheme. During parking period such consumers will get cylinders as per their entitlement at market price and subsidy will be kept parked with OMCs. This parked subsidy would be released as soon as consumer joins the scheme. However, if a consumer joins the scheme after parking period, the parked subsidy would lapse and consumer will get subsidy from prospective date only.

No consumer who has successfully enrolled under PAHAL scheme is deprived of subsidy. The State/UT-wise number of active consumer enrolled under the scheme with OMCs as on 25.02.2015.

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Bharat Stage Auto Fuels

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Lok Sabha in a written reply today that as per Auto Fuel Policy, 2003, Bharat Stage-IV(BS-IV) Auto Fuels were introduced in 13 identified major cities in the country on 1.4.2010 and BS-III was implemented in the rest of country in a staggered manner between April 1, 2010 to September 22, 2010. Further, availability of BS-IV fuels in 50 additional cities by 2015 is planned. Out of these 50 cities, BS-IV fuel is available in 26 cities. Thus BS-IV fuel is now available in 39 cities.

The names of remaining 24 cities to be supplied BS-IV fuel by March, 2015 are as under:-

Oil Companies have invested about Rs.35,000 crore in upgrading facilities in refineries and installation of additional facilities for production of BS-III & IV quality of auto fuels.

Ministry of Petroleum and Natural Gas has also taken a decision for availability of BS-IV fuels in the entire country by 1st April, 2017 in a phased manner.