Reddy, who moved from urban development to the oil ministry, got down to tackling the task straightaway with a brainstorming session with senior ministry officials on Thursday.
"This is not a new government. . .I am a new minister in the old government. I am morally and politically accountable for all the policies and decisions of my predecessor. They were collective decisions of the Cabinet," he said on Wednesday evening.
With rumours doing the rounds that Congress party brass were not happy with Deora and his junior Jitin Prasada over the last week's Rs 2.50 per litre hike in petrol prices, Reddy said spiralling international oil prices 'was a challenge.'
Oil public sector units, who face Rs 73,600 crore (Rs 736 billion) of revenue loss this fiscal, are pressing for a hike in diesel and LPG prices, but Reddy says 'a balance' will have to be struck between how much consumers can pay and the fiscal needs of oil companies.
"The task confronting the petroleum ministry and the country are common. We cannot allow oil companies to bleed.
"They cannot afford it. Nor can we allow huge hikes in diesel prices, as they have cascading effect (on inflation). The burden has to be shared by all," he said.
Despite last week's price hike -- the seventh since June, oil firms lose Rs 1.22
a litre on petrol. Besides, they lose Rs 7 a litre on diesel, Rs 366.28 on LPG and Rs 19.60 a litre on kerosene.
The Congress heavyweight said decisions on such issues would be taken at the Cabinet-level.
He will also have to quickly decide on giving approval to billionaire Anil Agarwal-run Vedanta Resources' the $9.6 billion acquisition of Cairn India.
The Prime Minister's Office had set month end as the deadline for deciding on the issue which has been hanging since August last year.
Reddy takes over as Petroleum Minister at a time when almost all the public sector companies under the ministry are seeing a change at the top.
Acting chairman B M Bansal will retire from Indian Oil Corporation, the nation's largest oil firm, by month-end while R K Singh is barely few months old at the helms of BPCL.
The nation's highest profit making firm Oil and Natural Gas Corporation too will be headless with current chairman and managing director R S Sharma superannuating at month-end.
Replacements for Bansal and Sharma are unlikely to be in place by February 1, as their files are struck in red tape.
Also, Reddy will have a new deputy in RPN Singh after Wednesday's Cabinet reshuffle also moved Prasada to Ministry of Road Transport and Highways.