New Delhi: A parliamentary panel has advised the petroleum ministry to work closely with the ministry of external affairs (MEA) and other relevant government agencies to deepen diplomatic engagement with oil-producing nations and secure favourable investment terms, and mitigate taxation as well as regulatory hurdles.
The parliamentary committee on public undertakings, chaired by Baijayant Jai Panda, Lok Sabha member fromKendrapara, Odisha, and Bharatiya Janata Party national vice president, observed that while proactive steps have been 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 persist due to sanctions, financial market volatility, and regulatory changes in host countries where overseas projects are located.
"These issues not only affect India’s energy import bill but also impede the ability of CPSUs to secure overseas exploration and production assets, thereby limiting long-term energy security. The committee recommend that ministry of petroleum and natural gas (MoPNG) should work closely with the ministry of external affairs (MEA) and other relevant government agencies to strengthen diplomatic engagement with oil-producing nations, secure favourable investment terms, and address taxation and regulatory hurdles faced by CPSUs abroad," the panel said in its report released on Thursday.
It also suggested that state-run oil companies should also 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 recommendations come at a time when several overseas assets of Indian state-run oil and gas companies have been impacted by geopolitical disruptions, sanctions and local issues across the globe. India's state-run companies have been trying to resolve the issues and ensure smooth operations.
For instance, OVL has been raising concerns about not receiving equity oil for its 20% stake in Russian oil company Rosneft’s Sakhalin-1 project. Mint earlier reported that the Russian Federation and Rosneft have stuck to their stand on paying dividends in lieu of OVLs' stake in the Sakhalin-1 oil and gas field, even as India wants equity oil as agreed earlier.
During the recent visit of Russian president Vladimir Putin to India, both nations agreed to resolve the challenges faced by their investors in the oil and gas sector.
Similarly, the $20 billion Mozambique LNG project, in which an OVL-led consortium had been under force majeure since 2021, has only recently revived. OVL announced last month that the force majeure has been lifted, and construction will resume soon. Similarly, OVL’s investments in Venezuela have been constrained by US sanctions on the South American nation.
In another report, the committee said that state-run Indian Rare Earths Ltd (IREL) has informed it that while India has the ability to mine and extract rare earth and convert them into oxides, the country's capacity to make them usable for the industry in the form of magnets is "non-existent".
"To address the issue of lack of industries in the intermediate value chain, IREL has established a Rare Earth & Titanium Theme Park at 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, also adding that more facilities would be set up to recover magnetic rare earths from end-of-life magnets.
The development is significant, as India has been trying to become self-reliant in terms of rare earth mining in a bid to de-risk the supply chain which is largely dependent on China.
