Private Players Wary of Oil and Gas in India due to an Unfavorable Climate

Private Players Wary of Oil and Gas in India due to an Unfavorable Climate PR Newswire NEW DELHI, September 6, 2012 NEW DELHI, September 6, 2012 /PRNewswire/ -- CNBC TV 18 Organized a Panel Discussion Where a Group of 6 Experts Discussed the Long Term Strategy to I n d i a ' s Energy Security Concerns About 93% of India's energy comes from fossil fuels and Oil and Gas accounts for about 43% of the total energy produced from the same. Of this 43%, a large part comprises of imports of oil and gas which has created an uncomfortable situation for a large developing economy like ours. Over the last decade, increasing the domestic production and encouraging exploration has been a focus area. Nonetheless, the oil and gas reserves of the country remain largely unexplored, primarily due to huge capital requirements. Exploration and production of Oil and Gas is a risky proposition where the inputs are generally deterministic, relatively independent of the quality and quantity of reserves. On the other hand, outputs are probabilistic, subject to probability of finding reserves of suitable quality. Therefore, only an attractive investment regime can attract domestic as well as foreign investor's risk capital to India. Domestic players lag behind, and poor prospect from profitability point of view has made foreign players apprehensive. An investor-friendly climate can only be created if regulatory bodies ensure reasonable returns and relatively risk-free environment to operate.