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India to raise FDI cap on O&G Infrastructure

Gaurav Sharma 07/12/2011 Doha, Qatar (IJ Online) – India will raise the country’s foreign direct investment (FDI) cap across all segments of oil & gas infrastructure over the coming years, according to the country’s Minister for Petroleum & Natural Gas S. Jaipal Reddy. At present India permits 100 per cent investment by foreign players only in upstream projects. “However, the government is putting through legislation which would raise the investment ceiling for other components of the oil & gas sector including raising investment cap in gas pipeline infrastructure to 100 per cent,” Reddy told delegates at the 20th World Petroleum Congress.

India’s Minister for Petroleum & Natural Gas S. Jaipal Reddy (seated third from right) addresses the 20 th World Petroleum Congress in Doha, Qatar © Gaurav Sharma, Doha 2011

In response to a question from IJ, the minister said the current level of foreign investment in the sector presently averaged between US$30 and US$35 billion. “We’d like to raise this to US$50 billion spread across upstream, midstream and downstream segments over the coming years,” he added. “There were no-go areas when it comes to the sector for foreign investors versus national security. But the government would not open these up for the bidding process in any case

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and hence the commercial investment valuation will not be included in the statistics. India is open for business – of our 14 public sector oil & gas companies, four are in the Fortune 500 and as such would make for robust project sponsors and partners,” Reddy told IJ. He also said Indian NOCs, lead by ONGC Videsh, were actively participating in overseas projects. At present ONGC is in 20 international jurisdictions. Earlier Reddy announced that India would increase investment in refinery infrastructure as the country wants to maintain both domestic demand for refined petroleum as well as its position as an exporter of refined petroleum products to regional partners. “Refinery infrastructure in India has seen phenomenal growth. We have a capacity of 193MMTA; by 2014 the target is to raise this to 240MMTA – not only will this maintain the export quota but will ensure domestic self-sufficiency in refined petroleum products until 2020,” he said. Reddy also said a decision on awards of acreage of its ninth and latest New Exploration and Licensing Policy (NELP 9) would be made within “two to three” months. Sources suggest 74 bids were received for the 33 blocks offered under NELP 9. A ministry official later told IJ that 32 of 33 attracted interest from the wider market but three unspecified blocks may be dropped given their proximity to an area of operation for the Indian Navy.

This report was first published by Infrastructure Journal on Dec 7th, 2011.

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