New Delhi, Dec 23 (IANS): Lauding the government's decision to hike excise duty on transport fuels following the plunge in international crude oil prices, industry chamber Assocham has called for installing an oil price regulatory mechanism to ensure a surplus to be used in hydrocarbons exploration and development.

"We urge the government to install an oil price regulatory mechanism to ensure that oil marketing produces enough investible resources for expansion of domestic exploration and exploitation of oil and gas resources," the Associated Chambers of Commerce and Industry of India (Assocham) said in a letter to Petroleum Minister Dharmendra Pradhan.

"The oil and gas prices for the consumer would have to be kept at a reasonable level adjusted every quarter through an independent mechanism to create surplus that could then be utilised in exploration and development of oil/gas fields," it added.

Assocham said the principle in price regulation should be to prevent precipitate fall in consumer level prices and create as much surplus as possible.

"The money thus gathered will support further exploration and development including financing of viability gaps for exploration and development," Assocham secretary general D.S. Rawat wrote in the letter.

Suggesting steps towards reducing the country's dependence on oil and gas imports, improving domestic production and increase efficiency in oil usage, the chamber said "popular sentiments should not be the only criterion regarding consumer prices for oil and gas."

The letter to the minister follows a study of the challenges in the oil sector following the Organisation of Petroleum Exporting Countries' (Opec) decision not to cut oil output even as international oil prices dipped below $60 a barrel last week.

"The most critical elements of India's energy security remain augmenting the domestic energy resource base, establishing long-term reliable overseas resources, reduce requirement and increase efficiency," Assocham said.