RK Singh:
As you are aware, we had earlier announced the discovery of gas in the
Mozambique block, and that was between 17 to 30 Tcf. In the same basin,
the operator has drilled another well with a fresh discovery in addition
to what was announced earlier. The fresh discovery has been established
and the potential reserve is estimated at between 7 and 20 Tcf. So, the
total reserve is now going to be between 24 and 50 Tcf.
ET Now: Is BPCL
looking at monetising investments in the Mozambique block because your
partner, Cove Energy, recently concluded a deal and sold its stake in
the block?
RK Singh: No, no there is nothing on the cards but the Cove
Energy
deal has already been concluded and Shell bought the stake. We are
going to stay on until gas production or thereafter doing the marketing.
So we have no intention of selling our stake, which in any case is only
10 percent. Part-selling the stake makes no sense. We are going to stay
on and by 2018-20, we expect gas to start flowing and we have every
intention to get into the marketing of the gas, including bringing it to
our own country. The total investment will be high. The outlay include
developing the block as well as downstream infrastructure development at
Mozambique so that the gas can be monetised. It can be liquefied and
transported which would require the development of a pipeline, jetty and
liquefaction plants.
ET Now: Do
you foresee any regulatory risks with the Government of Mozambique as
the Indian regulatory PNGRB is trying to cap marketing margins and
Government of India has hiked cess on crude? Do you think any taxes or risks could emerge in Mozambique for you?
RK Singh:
As of now the Government of Mozambique has been very investor friendly
and there are some local taxes. For example, they levied a capital gains
tax on Cove Energy but Shell went ahead and bought the stake for $1.8
billion anyway. So this is going to be the source of renewing but I do
not see anything unusual happening which will affect us adversely.
ET Now: What are your estimates for FY13 underrecoveries?
RK Singh:
Nothing can be stated at the moment because it all depends on the
compensation that we receive from the government and we hope that it
will continue to compensate us 100 percent. As we have been saying in
the past, the government will have to raise prices and compensate us for
the losses in combination with upstream compensation and also price
increases. These three factors are important for us to be compensated
100 percent, and we hope to get it. Should that not happpen, we will not
be able to generate revenue for future investment.
ET
Now: When can we expect OMCs hiking prices of petrol as crude prices
have not really come down due to the rupee's depreciation?
RK Singh:
It is true that petrol has been deregulated and it is not covered under
the subsidies scheme. But being a government company and the fact that
any price increase will affect the public at large, consultation with
the government is inevitable. Consultation is going on and I hope that
very soon we will increase petrol prices as well.
ET Now: Can you exactly quantify underrecoveries for BPCL in both diesel and petrol?
RK Singh:
Although, crude prices have come down so have prices of finished
products. I am talking about the international price and all our
refinery transfer prices are determined on the international price. But
additionally, the rupee's depreciation has to the largest to neutralise
the gain that we have on account of a reduction in crude and product
prices. So, I do not think there is much difference as far as
underrecoveries are concerned. Currently, we are losing about close to
Rs 14 per litre on diesel, around Rs 480 on LPG, and Rs 30 on kerosene.
If prices are not increased or duties on petrol reduced and if prices of
crude and other products continue to be high and the rupee's
depreciation continues, the estimated underrecovery for 2012-13 is
around Rs 200,000 crore.