The oil ministry has chalked out a strategy to gradually reduce energy sourcing from politically volatile countries in the Gulf region and explore importing natural gas from Russia, Iran and CIS countries, government sources said.

In a recent presentation to the prime minister, the oil ministry also proposed a new regime to manage oil-field contracts. In the current system the contractor recovers costs before sharing profit with the government. In the proposed system, the two sides share revenues from the day production starts. "The matter is under active consideration of the government," one source said.

Officials say the simpler new regime should minimize state interference in oil-field affairs and boost private investment, leading to higher output and better energy security.

To improve energy security, oil ministry officials say the country should avoid heavy dependence on oil and look at opportunities to import natural gas from all possible sources.

"Russia is one such potential supplier. We may import natural gas from the country either in liquid form or through a pipeline. A strategy paper is being prepared after the visit of Petroleum Minister Dharmendra Pradhan to the country last month," one government official said.

India has warm relations with Russia, which is the world's second-biggest producer of gas and third-largest producer of crude oil.

According to US Energy Information administration, oil and gas revenues account for over 50 per cent of Russia's budget revenues.

Government officials said the ambitious Iran-Pakistan-India ( IPI) pipeline could be revived after Western sanctions against the country is eased. The project was put on backburner in 2008 by the UPA government citing reasons such as project structure, delivery period of gas, pricing and pipeline security. "Iran is keen and India needs energy. The project can be revived," the official quoted earlier said.

The oil ministry is also working on oil supply diversity especially after political disturbances in Iraq, India's biggest crude oil supplier after Saudi Arabia. India committed to import about 19 million tonnes of crude oil from Iraq and is concerned about the situation in the region, another government official said.

India is planning to source crude oil from Canada after it has developed Venezuela as one of the major suppliers outside the Gulf countries.

"African oil producing countries are willing to export on long-term basis and Indian refiners are in talks with them," the official said.

"There has been turmoil in Syria, Iraq and other oil producing countries in the Middle East. We can't keep all eggs in one basket," the official said. India imports more than 80 per cent of crude oil it processes. Indian refiners processed over 222 million tonnes of crude oil 2013-14. India's domestic crude output that year was about 38 million tonnes.

Source:- economictimes.indiatimes.com