The Oil & Gas industry is one of the 8 core industry segments in India and considered to be of great import. On account of the place of high regard it holds in the Indian Economy, the strategic decisions taken in relation to it tend to influence multiple sectors of the economy. The Indian Governments earlier policy of regulation of petrol and diesel prices stifled competition and prevented growth, having a negative impact on the overall Industry. The recent deregulation of petrol and diesel has had certain benefits, like:
1. Helping reduce our long term debt and fiscal deficits.
2. It is expected to increase the influx of private players into the market ensuring better quality and service at competitive prices, thus improving bargaining power of the consumers.
India’s dependence on imports for Oil and Gas have made this sector particularly susceptible to the price movement in the international sphere, and especially to a global slowdown. In order to counter this problem, it is necessary to fund Oil Exploration in the country itself. To this end, the government is encouraging smaller firms having a fraction of the operating costs as compared to larger ones are the perfect entities to develop the small and marginal oil fields in the country without it becoming uneconomical to attempt.
According to certain reports, the crude oil production stood at 37.8 Million Metric Tonnes in India while over 14.2 Billion USD worth of crude oil was imported making them vulnerable to crude prices and the exchange rate. Thus it is clear that the way forward for India lies mainly in greater exploration and production with a view to achieve as high a level of self sufficiency as is possible. For this purpose, the government has taken certain steps like the allowing of 100% FDI in natural gas, refineries and petroleum products among others. Further, the abolition of regressive policies like the deregulation of diesel and the hiking of prices are seen to have had a positive impact and encourage & investment in the sector.
The multitude of regulations governing entry into this field, bidding on and acquisition of contracts and a number of technical and financial issues relating to development all have the tendency to create agonizing legal disputes in relation to this field. We hope to provide our clients with sound advice and legal support in all their ventures to make their experience as a player in this sector as hassle free as possible.