Opportunities abound: investors gung-ho
By Daksesh Parikh
The 0il and gas sector is currently offering a lot of opportunities for project managers, contractors, vendors and allied service providers. The budget outlays for the public sector units in the oil and gas field itself add up to over Rs 18,000 crore for the year 2001-02.
This is over and above the investments envisaged by the private sector as well as the foreign companies. If one takes into account the total investments being envisaged in the sector it could well exceed Rs 100,000 crore in the coming two or three years.
Oil exploration especially in the deep-sea bed is all set to take off. The second strike of gas by Cairn Energy in the last week of June has already buoyed up sentiments of oil majors. The mere news of the find was enough to see the prices of the shares going up by over 3 per cent on the same day in UK. Investors have already started taking a fresh look at other oil majors like Niko Resources. The more than generous product sharing contracts offered by the government of India to the operators of these leased blocks will in turn entice more investments in the sector. Operators like Tullow Oil of the UK started farming out contracts to private companies like Reliance. While oil exploration is termed as a high risk, the high reward industry news of oil strikes invariably accelerates fresh investments in this sector.
Besides onshore and offshore exploration the production of downstream products including petrochemicals, LNG, LPG, Lubricants will also spew more opportunities in the setting up of transportation, storage and distribution outlets. Apart from new refineries coming up, revamping of existing ones and expansion also entail substantial investments. Indian Oil for instance has earmarked over Rs 3600 crore for new schemes in refineries.
The fears expressed in certain quarters that the advent of LNG in urban areas may cause a setback to the growth of LPG also appear to be unfounded. There is still a lot of unsatiated demand for LPG in the country. And in the worst scenario one could well see LPG being used for industrial applications. Pilot projects for mass usage of LPG in buildings are already being tried out and success in these projects could well see more opportunities for new investments and projects in this sector.
The best part of taking an exposure in this sector is that even after the removal of the administered price mechanism the dominance of the public sector units will stay for at least another decade. And fresh investments of these PSUs, at least those sporting the navratna tag, are unlikely to be eclipsed by short-term perspectives. A steady growth in investments would provide ample opportunities for project stakeholders.