Reduction in ad valorem excise duties for petrol and diesel to 6 per cent is positive for oil marketing companies like Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp, as 2 per cent reduction in excise duty translates to almost Rs 2500-Rs 3000 crore (Rs 25-30 billion), say experts. According to the oil ministry, the oil companies will gain a lot from the duty cut.

Nagarajan Narasimham, Crisil, "It is definitely positive because 2 per cent reduction in excise duty translates to almost Rs 2500-Rs 3000 crore. If all these oil companies are allowed to keep the benefit then it is positive for the sector."

Talking about the infrastructure developments on the oil and gas sector, he said, "On the infrastructure side, specific steps has been taken in the case of oil and gas sector in specially the gas pipelines space. In the next 3-4 years you will be seeing hectic activity, as KG Basin gas is trying to network that into HBJ pipeline. There will be lot of investments. It is definitely positive for both manufacturers as well as the companies which are going to invest into that."

JP Sinha, Amibit Capital, "The ad valorem excise duty from 8 per cent to 6 per cent, augurs some amount of benefit for the oil marketing companies. But purely if you are looking at whether it is going to enthuse their overall sentiments, it is difficult to say. Even the oil bonds to some extent are likely to get adjusted. The gas pipeline space looks interesting and attractive."

In FY07, 162 production-sharing deals have been signed in the oil and gas exploration, says the Budget. Oil companies have invested Rs 97,000 crore (Rs 970 billion) for oil exploration.

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