Diplomacyindia.com

India unveils new norms for hydrocarbons licensing, pricing

India unveils new norms for hydrocarbons licensing, pricing
March 11
11:21 2016

New Delhi, March 11  Taking up some long-pending issues in the oil and gas space, India on Thursday approved a new policy for their exploration, and defined the pricing norms for existing and new discoveries made in difficult areas. Contracts for 28 old blocks were also extended.

Briefing the media on the decisions of a cabinet meeting presided over by Prime Minister Narendra Modi, Petroleum Minister Dharmendra Pradhan said the new oil and gas exploration policy will now be based on a revenue-sharing model, as opposed to cost-and-output-based norms earlier.

The difficult areas for which the new pricing norms have now been formulated are defined as those from deep-water, ultra deep-water and high-pressure, high-temperature areas. Such areas were not considered when prices were fixed for normal gas discoveries in October 2014.

The bulk of such fields are with Reliance Industries and state-run Oil and Natural Gas Corp.

What could impact the discovered oil fields of Reliance Industries is a clause that says if there are pending arbitration or litigation cases pertaining to such assets, the new policy shall only become applicable upon the conclusion or withdrawal of legal proceedings.

The decision had an impact on the shares of Reliance Industries. They steadily fell during the day — from Rs.1,045 to Rs.1,012, to log a loss of 2.87 percent. The company said it will await the fine print before reacting.

The shares of ONGC closed higher by 0.29 percent at Rs.205.70.

On difficult discoveries, an official statement later said the price will be calculated once in six months. The government feels this could potentially monetise 28 discoveries and also lead to some major investment. Reserves associated with such blocks are valued at $28.35 billion.

The oil minister said production contracts on some of the discovered fields could not be signed during last two decades due to a number of reasons, including arbitration proceedings, court cases, observations by the official auditor on “gold plating” of costs and alleged scandals.

“Resources worth more than Rs.261,000 crore will be brought into production as the result of today’s cabinet decisions,” Pradhan said. “The decisions will also go a long way in generating employment, enhance transparency and reduce administrative discretion.”

He said the new exploration and licensing policy will allow production of both conventional and unconventional hydrocarbons, including shale gas and coal-bed methane, under a single license. “It also provides for marketing freedom for crude oil and natural gas produced from the blocks.”

Among the other decisions of the cabinet pertaining to the oil and gas sector, a Rs.8,000-crore outlay was provided to extend subsidised cooking gas to 50 million poor families in the name of the woman member, and the extension of contracts for 28 older hydrocarbon blocks.

This apart, the cabinet cancelled the Ratna and R-Series field contract awarded in 1996 to a consortium of Essar Oil and Oil Pacific UK.

In his budget speech last month, Finance Minister Arun Jaitley had said the government will extend incentives for the discovery and exploration of gas by providing companies the freedom to market the output.

“India is blessed with rich natural resources including oil and gas. However, their discovery and exploitation has been below our potential. Imports of hydrocarbons occupy a large share of India’s total imports,” Jaitley said.

“As part of our drive towards self-sufficiency, the government is considering to incentivise gas production from deep-water, ultra deep-water and high pressure-high temperature areas, which are presently not exploited on account of higher cost and higher risks,” he said.

He said companies will be provided calibrated marketing freedom, and also a pre-determined ceiling price discovered from global benchmarks.

About Author

admin

admin

Related Articles

Dr Meena Singh Roy speaking on Uzbekistan Constitutional Reform Referendum 2023

On the Eve of 30th Years of Independence of Republic of Uzbekistan, H.E. Dilshod Akhatov, Ambassador of Uzbekistan to India in conversation with Ameya Sathaye, Editor-in-Chief.

Denmark Ambassador to India Freddy Svane in conversation with Amb Pradeep Kapur & Ameya Sathaye, Editor-in-Chief

Italy india will work closely together for G20 : Italy Envoy to India

Do you know why FINLAND is ranked number ONE in Happiness index, watch this interview with Finland Ambassador to India

Exclusive Interview : H.E. Jasem Ibrahem Al Najem Ambassador of Kuwait to India speaks on India Kuwait bilateral relations

ड्रैगन ने हाथी को क्यों डसा, भारत- चीन रिश्तों की कहानी- रंजीत कुमार के साथ अमेय साठे की विषेष चर्चा ड्रैगन ने हाथी को क्यों डसा, भारत- चीन रिश्तों की कहानी- रंजीत कुमार के साथ अमेय साठे की विषेष चर्चा 0 comment Read Full Article

H.E. Reuben Gauci, Ambassador of Malta to India speaks on India-Malta Bilateral Relations

Portugal supports India in covid crisis : Portugal Ambassador Carlos Pereira Marques speaks with Ameya Sathaye, Editor-in-Chief

Vietnam Ambassador to India, Pham Sanh Chau speaks on Vietnam support to India in tackling covid crisis

Netherlands supports India in covid crisis : Netherlands Ambassador Marten van den Berg speaks with Ameya Sathaye

Envoy Speaks : Gopal Baglay, Indian High Commissioner to Sri Lanka speaks on Bilateral relations, business opportunities, Tourism & people to people to people contacts

Kuwait reciprocates, we stand with India in this hour of crisis : Kuwait Ambassador to India

Canadian High Commissioner, Nadir Patel speaking on support to India in covid crisis

Italian Ambassador to India, Vincenzo de Luca speaking on Italy support to India in covid crisis

H.E. Mr. Reuben Gauci, Malta High Commissioner to India speaks with Ameya Sathaye, Editor-in-Chief of Malta support to India in covid crisis

Danish Ambassador to India Freddy Svane speaking on Denmark aid to India

Video Interview with Vinod Daniel, CEO, India Vision Institute, Board Member, International Council of Museums & Chairman, Ausheritage

DENMARK AMBASSADOR FREDDY SAVNE VISIT TO CORONOVIRUS VACCINE FACILITY AT HYDERABAD, A TRIP ORGANISED BY MINISTRY OF EXTERNAL AFFAIRS, GOVT OF INDIA FOR FOREIGN ENVOYS BASED IN INDIA.

MALTA HIGH COMMISSIONER TO INDIA, H.E. REUBEN GAUCI SHARING HIS IMPRESSION ABOUT HIS VISIT TO HYDERABAD : TRIP ORGANISED BY MINISTRY OF EXTERNAL AFFAIRS, GOVERNMENT OF INDIA FOR ENVOYS BASED IN INDIA TO UPDATE ON CORONAVIRUS VACCINE

H.E. Mr. Dinesh Bhatia, Ambassador of India to Argentina in conversation with Ameya Sathaye, Editor-in-Chief

Pictures of Formal Launch of Website Diplomacyindia.com

Exclusive Interview with Prime Minister of Guyana, H.E. Mr. Moses Veerasammy Nagamootoo during his recent visit to India.Highlights of the interview were Indian Cultural Connect, Vibrant Bilateral Ties and Cultural Connect and India’s Economic Prowess.

Video Message from Shri Prakash Javadekar, MoS (IC) for Forest, Environment & Climate Change on eve of Formal Launch of Website Diplomacyindia.com

Message from Gen. V K Singh, (Retd.) Hon’ble MoS, External Affairs to Diplomacyindia.com