Industry experts’ 1st TweetChat sets expectation from Union Budget 2016 for Oil & Gas sector

Resource Digest has announced that it had organised a first of its kind #BudgetTalks2016, an exclusive pre-budget Twitter Chat session with a focus on the Oil & Gas sector on February 19. The Twitter Chat aimed at deliberating on the expectations of Indian Upstream Oil and Gas Industry from the upcoming Union Budget 2016-17, that will be presented on February 29, 2016.

The discussion was moderated by Nayantara Rai, leading commentator and journalist on Oil and Gas, associated with CNBC TV-18. Also in the panel were Mr. Deepak Mahurkar, Leader-Oil and Gas, PwC India, Mr. Sudhir Mathur, CFO Cairn India and Mr. R.S. Butola former IOC Chairman & former OVL MD.

Participants felt that the global oil and gas pitch has shifted dramatically. The forecast for the industry is extremely different today compared with how it looked just a couple of years ago. It has shifted from a traditional structure to a more imbalanced market driven mostly by increased supply and declining demand growth.

While there has been much debate around the double impact of plummeting oil prices coupled with the burden of taxation, the industry is hopeful of a positive response from the Government soon. The Ministry of Petroleum and Natural Gas has supported the industry’s demand for ad valorem cess, by recommending the same to the Ministry of Finance.

It is interesting that while several countries (including the UK, the US and China) have changed fiscal systems to increase production and promote investments in the battered primary energy sector, let’s hope the Government of India will follow the suit.

A reduction in cess on crude oil will encourage the domestic E&P sector, which is reeling under stress due to crash in crude oil prices.

In a first of its kind a #BudgetTalks2016, focussing on the E&P sector; the netizens and participants were able to exchange their views and expectations from the Union Budget and create public awareness through mutual discussion. 

“For Hydrocarbon sector, Union Budget 2016 will be a clear indication of how the policy will shape to secure energy. Any local levy is good if it is flexible and meets the test of cyclic oil markets. The most important expectation is policy stability and defined objectives of energy security” said Mr. Deepak Mahurkar, Leader-Oil and Gas, PwC India.

Sudhir Mathur, CFO, Cairn India said "It is indeed heartening to note that MoPNG is supporting the industry’s long standing petition to make oil Cess ad-valorem. If implemented it will be a win-win for all stakeholders. We remain optimistic that in the upcoming Union Budget this shall be addressed, sending a positive signal to the investors. It will also encourage the sector to pursue the Prime Minister's vision of reducing India’s import dependence for crude oil by at least 10% by 2022".

R.S Butola, former IOC Chairman & former OVL MD, said “Upstream oil sector is a big contributor to national economy, employment generation and downstream manufacturing. Economic multiplier effect of oil and gas is much higher than other sectors. Oil price decrease hits upstream companies more than dollar depreciation. There is a need to provide fiscal incentive for tight oil/gas and Enhanced Oil Recovery to boost domestic production. It is also important to facilitate policy and easy PSC administration.”

Nayantara Rai, Journalist and commentator on Oil and Gas, associated with CNBC TV-18 while moderating the session stated “With crude prices plunging to an 11-year low, and the issues of cess and how it is vital to address it for the oil and gas sector. Since it is become imperative to introspect and assess the steps that the government needs for attracting more investment to the sector.”

“As a leading natural resource magazine Resource Digest is proud to provide a platform for the Oil & Gas sector to discuss the issues and expectations of the sector on the twitter platform to provide a forum for open deliberation before the crucial Union Budget 2016-17” said Durbar Ganguly, Editorial Board Member, Resource Digest.