Budget may have mixed impact on oil and gas sector

Industry watchers feel that the budget 2013-14 may have a mixed impact on the oil and gas sector.

While the Finance Minister announced that his government would soon release shale gas policy and review the pricing of natural gas, industry players are cautious. They feel that one has to wait and watch how the government implements the above measures.

The budget provided exemption from excise duty to sulphur recovered as a by-product in refining of crude oil and which is used in manufacture of bentonite sulphur. Further, excise duty and additional customs duty (commonly known as CVD) has been exempted on manufacture and import of dredgers.

The changes in the international crude oil prices make a significant impact on the economy, which in turn, leads to a rise in prices for many essential commodities – increasing inflation.

India’s oil and gas sector typically contributes over 15 percent to the GDP. Given the lengthy gestation period and investment risk involved in this sector, industry was looking forward to policy reforms and various fiscal incentives.

The Finance Minister has strived to allay the concerns of the oil and gas sector which has been pending for a while viz. natural gas pricing and exploration policy.

The natural gas pricing policy also is proposed to be reviewed and uncertainties regarding pricing are expected to be removed. The bottlenecks preventing the development of oil and gas blocks awarded under NELP also proposed to be eliminated.