Parliamentary panel tells government to strengthen ties with oil nations
New Delhi: A parliamentary panel has recommended the oil ministry to work closely with the Ministry of External Affairs (MEA) and other relevant government agencies to deepen diplomatic relations with oil-producing countries, secure favorable investment conditions and reduce taxation as well as regulatory hurdles.
The parliamentary committee on public enterprises observed that despite proactive steps being taken by state-run enterprises such as Indian Oil Corp Ltd (IOCL) and ONGC Videsh Ltd (OVL) to diversify crude oil sources and manage geopolitical risks, challenges remain due to sanctions, financial market volatility and regulatory changes in host countries where offshore projects are located.
“These issues not only impact India’s energy import bill but also hamper the ability of CPSUs to secure offshore exploration and production assets, thereby limiting long-term energy security. The committee recommends that the ministry of petroleum and natural gas (MoPNG) work closely with the ministry of external affairs (MEA) and other relevant government agencies to strengthen diplomatic relations with oil-producing countries, secure favorable investment conditions and address taxation and regulatory hurdles faced by CPSUs abroad,” the panel said in its report. on Thursday.
It was also recommended that state-run oil companies adopt digital and enterprise risk management frameworks to continuously assess geopolitical vulnerabilities to ensure a more resilient and sustainable energy strategy for the country.
The proposals come at a time when many overseas assets of Indian state-run oil and gas companies are affected by geopolitical disruptions, sanctions and domestic issues around the world. India’s state-run companies are trying to solve problems and ensure smooth operations.
For example, OVL expresses concern about the Russian oil company Rosneft’s inability to obtain home oil for its 20% stake in the Sakhalin-1 project. Mint had previously reported that the Russian Federation and Rosneft were insistent on their stance on OVLs paying dividends in lieu of their stake in the Sakhalin-1 oil and gas field, even though India wanted stock oil as agreed earlier.
During Russian President Vladimir Putin’s recent visit to India, both countries agreed to resolve the challenges faced by investors in the oil and gas sector.
Similarly, the $20 billion Mozambique LNG project, which the OVL-led consortium has been under force majeure since 2021, was also recently revived. OVL announced last month that force majeure had been lifted and construction would restart soon. Similarly, OVL’s investments in Venezuela have been restricted by US sanctions on the South American country.
In another report, the committee said state-run Indian Rare Earths Ltd (IREL) had reported that although India has the ability to mine and extract rare earths and convert them into oxides, the country’s capacity to make them available for industry in the form of magnets is “non-existent”.
“To address the problem of lack of industry in the intermediate value chain, IREL has established a Rare Earth and Titanium Theme Park in Bhopal. At this facility, rare earth metals have been produced for the first time in the country,” IREL said in its response to the committee. he said, adding that more facilities would be built to recover magnetic rare earths from end-of-life magnets.
This development is significant as India seeks to become self-sufficient in rare earth mining to de-risk its supply chain, which is heavily dependent on China.
