New Delhi, Dec 18 (IANS): India needs to develop its infrastructure and increase production efficiency in the oil and gas sector to secure its long-term energy security, a leading industry lobby said Sunday.
"Domestic oil and gas industry needs to address issues such as the deficit of manpower and the impact of inadequate and ageing infrastructure," said a joint study by the Federation of Indian Chambers of Commerce and Industry (FICCI) and consultancy firm Ernst and Young.
The country has the world's fourth-largest coal reserves and 0.8 percent of natural gas reserves, but domestic production has not been able to keep up with the increasing demand.
The country meets 73 percent of its fuel needs through oil imports.
According to the study, the government needs to introduce reform and favourable policies for the private sector to secure foreign oil and gas assets.
"India has to introduce favourable policies that encourage private players and enable India's oil and gas companies for acquisition opportunities for O&G resources internationally," said Dilip Khanna, partner, oil and gas practice, Ernst & Young.
Khanna's views were corroborated by Narendra Taneja, energy expert and co-chairman of FICCI's hydrocarbons committee.
"India must give incentives to both public and private oil companies to speedily acquire exploration and production (E&P) assets wherever we can in various continents."
The study says though the country had surplus oil refining capacity, it still needs major investments to upgrade the existing production infrastructure.
"Domestic production has remained flat owing to delays in commissioning of new projects and declining production from existing mature fields," says the report.
It says there is an urgent requirement to shore up the energy security initiatives in an environment of unstable geopolitical situation in the Middle East and North Africa, from where India gets 60 percent of its oil imports.
The country's oil imports increased from $50.3 billion in 2005-06 to $115.9 billion in 2010-11. The country imported $75 billion worth of crude till October this fiscal.