The production of crude oil from the country's sedimentary basins fell marginally by 0.3 per cent to 2.89 million tonne (mt) in January this year compared with 2.90 mt in January 2007. The output was, however, marginally higher than the 2.88 mt in December, data released by the petroleum ministry showed. The output of natural gas in January was also down by 2.53 per cent to 2.69 billion cubic metres (bcm) compared with the 2.76 bcm in January 2007. Compared with the 2.85 bcm gas produced in December 2007, the fall in January this year was higher at 5.61 per cent. The decline in crude oil and gas production in January was due to a two-week shutdown of a production platform at Bombay High, the country's largest oil producing field. In the April-January period of the current financial year, crude oil production was 0.28 per cent higher at 28.46 mt compared with 28.38 mt in the same period of the last financial year. Natural gas production was up by 1.7 per cent to 26.89 bcm from 26.44 bcm in April-January 2006-07. In January this year, the country's oil refineries processed 13.67 mt crude oil, 5.31 per cent higher than the 12.98 mt in the year-ago month. The rise in refinery production is primarily due to private refiner Essar Oil. The quantity of oil processed at the company's refinery rose almost 161 per cent in January after the full 10.5-million-tonne-per-annum capacity was commissioned in the later part of the month. The refineries, on an average, utilised 108.4 per cent of their capacity in January 2008, against 106.9 per cent in the year-ago month. In December 2007, the capacity utilisation was 103.5 per cent. In the April-January period of the current financial year, refinery output increased 7.30 per cent to 129.78 mt, compared with 120.94 mt in the same period of the last fiscal. Average refinery capacity utilisation during the period was, however, lower at 104.2 per cent compared with 106.7 per cent in the year-ago period.

An empowered committee of secretaries (ECS) has cleared Cairn India's proposal to recover the cost of the $700-million pipeline from its Rajasthan fields to the Gujarat coast through sale of crude oil from the field. "The ECS has allowed the pipeline cost to be included in the field development cost of the Rajasthan field,' said a senior government official. The ECS decision is likely to go to the Cabinet Committee on Economic Affairs for final clearance. Cairn is laying a pre-heated 585-km pipeline to transport its "waxy' crude oil from Barmer in Rajasthan to Salaya in Gujarat from where it will be transported to various refineries. The government allows a company to recover the investment in developing an oil or a gas field through oil sales. Once the company has recovered the costs, the government starts taking a share of the profits from oil sales. The field extends to the point of delivery of oil. The ECS decision will shift the point of delivery from Rajasthan to the Gujarat coast. A Cairn executive said they had not received the final word from the government. He added that all major contracts for laying the pipeline and developing the field had been awarded. "We remain committed to producing oil from Rajasthan in the second half of 2009,' the official said. The pre-heated pipeline became necessary after . Refinery and Petrochemicals Ltd (MRPL), the official buyer of the crude, said it could take only around 1 million tonne (mt) out of the projected 7.5 mt output. The oil has to be transported through a heated pipeline as this "waxy' oil coagulates at normal temperatures.

The government is planning to create a multi-billion-dollar sovereign wealth fund to invest in energy assets such as oil, gas and coal across the world. "The plans are at a very initial stage. A decision on this would be taken after the budget,' Planning Commission energy adviser Surya P Sethi said here. "The fund, if set up, will invest in overseas oil, gas and coal assets.' Sethi did not give any idea of the possible size of the fund, but said: "It has to be in billions of dollars.' According to the latest data available with the Reserve Bank of India, the country's foreign exchange reserves stood at about $290.8 billion for the weekended February 8, up 57% from a year earlier. A sovereign wealth fund comprises assets such as stocks, bonds and other financial instruments, which is owned and managed by the government. The funds are deployed overseas for higher returns. The fund will be on the lines of Temasek Holdings, a sovereign wealth fund owned by the Singapore government. Officials are of the view that low returns on investments in US treasury bills and other sovereign securities did not cover the costs of maintaining huge forex reserves, and justified establishing a fund that could deliver higher returns. Last year, state-run India Infrastructure Finance Co Ltd set up an offshore unit in London to use part of the country's reserves to help local Companies import equipment for infrastructure projects. The corpus of this fund is $5 billion. The central bank has previously expressed reluctance at using forex reserves to set up an investment fund as it said the build-up in reserves was largely to insulate the Economy from the impact of huge capital inflows, which could be reversed at short notice.

Have gas, will explore' seems to be the mantra as India's $90 billion oil and gas industry gears up for the July round of talks with Iran on the $7.4 billion Iran-Pakistan-India (IPI) gas pipeline project.