Executive Summary based on discussions, on the spot visits and mutual review of the draft together with all stakeholders.

1. Report of High Level
Committee
on Oil & Gas PSUs
FEBRUARY, 2019

2. Contents
Executive Summary
1. Overview of the sector
2. Research & Development
3. Training, Development & Human Resource
4. Merger & Acquisition
5. Taxation issues post-GST
6. Major Recommendations
7. Annexures
The report is based on discussions, on the spot visits and
mutual review of the draft together with all stakeholders.

3. Reducing import dependence -- 1
 Enhance domestic production
 Biofuels
 2G bioethanol
 Bio-crude
 Drop-in-fuels
 CBG
 CBM
 Electric Mobility –All electric, Hybrids
 Co-generation (electricity & hydrogen) through steam
electrolysis
Major beneficial
impact on rural
economy

4. Reducing import dependence -- 2
 Coal to fluid fuels
 Gas hydrates
Nuclear/Renewable Hydrogen
Biomass Additional Non-fossil fuel
CO2 --------------- do -----------
------------
 Solar, Nuclear & Gas hydrates are the long term sustainable
energy sources for India. We must quickly develop and deploy
technologies to meet all user demands through them. This will
also address climate change threat.

5. Emphasise Gas economy & develop
related infrastructure
• Current share of gas in India is only at 6% as against 24% globally. Gas
outlook is better than oil globally
• Investment in upstream gas fields overseas & long term tie-up in supply
chain is expected to lead to landed cost in the range of USD 6.2~8.8 /
MMBTU (with a fair degree of non-volatility) as per the preliminary
estimates by Petronet LNG.
• Delink CNG from PNG business (which has GA rights) to enhance gas
demand and better utilisation of gas infrastructure. There is merit in
developing gas transmission business on lines of power transmission.
• Gas price revision, within the limits of commercial marketability, can
make marginal discoveries/ discoveries in deep sea gas fields,
commercially viable. This could make a significant quick addition to
domestic gas production.

6. Refineries
• Refinery sector in India is a success story.
• Recognise that refinery capacity would need to grow despite
emphasise on electric mobility. Long distance transport would
any way continue to need fluid fuels.
• Aim at becoming a net exporter in petrochemicals.
• Seek greater technological independence through R&D in
refinery sector.
• Above actions would facilitate energy security as well.

7. Research & Development
• Transition from heavy import dependence to domestic reliance needs a
far more aggressive research and technology development effort.
• R&D is also crucial to sustaining functioning and competitiveness of
productive assets.
• Need to nurture a more conducive non-hierarchical peer guided
environment.
• It is desirable that there is a board level Director R&D and a separate
R&D cadre in all oil & gas PSUs.
• A number of ideas for transition to domestic reliance for energy needs
are available. They need to be developed and tried out at demonstration
scale from where credible decisions for commercial deployment can be
taken. This requires national thrust and a body to drive it.

8. Apex advisory body
 Apex advisory body to pursue
technology foresight activities and
propose new directions to be pursued
towards national energy security
 Oversee research in Laboratories
 Take up demonstration projects of
National importance
 Policy advice in new technology areas
 Composition
• Technology & domain experts
• CEOs of PSUs
• Specific experts (case by case)
• Chairman CBDT
 Each demo project to have a steering
cum monitoring committee
 In future, a large national research
laboratory should also be set up
directly under the ministry.

9. Redefining role of CHT
• Bring in upstream and midstream within its mandate
• Create a new division and a SAC to support upstream &
midstream programme
• CHT to service Apex Advisory Body and both SACs.
Recommendations of SACs to be overseen by Apex Advisory
Body for necessary action by the Government
• Since entire financial resources are drawn from National Oil
Companies, funding R&D in private companies is not
recommended.

10. Human Resource
• PSUs should deepen their engagement with research, education, training and skilling
institutions both internal and external to address the issue of HR training and development
with a much broader perspective.
• Opportunity of CSR framework and CSR funds may be leveraged for skilling India and
empowering institutes in petroleum sector to generate pool of skilled manpower.
• In most of oil & gas PSUs, the average age of executives are very high.
• Skill sets in the industry are highly specialised and difficult to develop and acquire in short
period of time. Thus, a long term succession planning is needed to make the transition smooth.
Board of the company needs to be empowered to take decisions relating to employees welfare,
remuneration, VRS, reward mechanism as per the affordability of the respective company, to
retain the talent and reduce attrition of experienced manpower. This flexibility will help the
companies to retain talent and perform more effectively in their respective domains.

11. Merger & acquisition
Our oil & gas PSUs are relatively small as compared to global
oil giants. They need to be bigger in order to be able to play a
more decisive role in global energy market. Further vertical
integration along the hydrocarbon value chain should enable
significant de-risking in light of volatility in hydrocarbon
prices. There is merit in consolidating the sector even as we
keep the aspect of maintaining competitive environment
alive. We however should deal with the socio-cultural
aspects related to man-power with sensitivity and suitable
strategy should be in place for the purpose.

12. Taxation issues post-GST:
HLC has looked at the taxation issue
in detail and recommends that GST
should be made applicable to this
sector.

13. Thank
You