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Govt clears 30 oil and gas discoveries for production: Minister

January 12, 2015 16:49 IST

The Production Sharing Contract between the government and the explorer has rigid timelines for each stage of exploration and actions have been initiated against firms even if deadlines are missed by a day.

An oil rigEnding months of logjam over discoveries mired in contractual disputes, the government has cleared 30 projects of firms like Cairn India and Oil and Natural Gas Corporation to help monetise about 2.6 trillion cubic feet of gas reserves.

Oil Minister Dharmendra Pradhan said the government has approved a policy framework for relaxation, extensions and clarifications in timelines that will grant operational flexibility to help produce oil and gas from several discoveries that are mired in contractual disputes.

"I am happy to share that after this approval, within a short span of less than 3 months, 30 long-pending issues have been resolved.

“This is expected to result in exploitation of about 34 million barrels of oil and about 0.7 Trillion cubic feet of gas," he said at Geo India Conference.

Operational flexibility has been provided in enforcing contracts by way of relaxing some of timelines prescribed for discoveries so that E&P activities do not suffer on account of excessive rigidity in decision making.

The Production Sharing Contract between the government and the explorer has rigid timelines for each stage of exploration and actions have been initiated against firms even if deadlines are missed by a day.

"The estimated reserves of discoveries where additional probing has been allowed is to the tune of about 172 million barrels of oil and 1.9 TCF of gas reserves," he said.

Three-to-six month extension in the current 18-60 month timeframe for submission of declaration of commerciality of discoveries, a prerequisite before investment plans can be finalised, has been approved.

Also, the deadline for submission of investment plan for the discoveries too would be extended by up to six months.      

The PSC provides for time period for submission of field development plan for hydrocarbon discovery after DOC.

There is no provision in the PSC for extension of this time period and non-acceptance of FDP due to late submission results in non-monetisation of discoveries.

Also, upstream regulator Directorate General of Hydrocarbons, Noida, India has been given flexibility to accept discoveries for which operators had failed to provide prior notification to the government.

Pradhan said the Policy Framework for Relaxations, Extensions and Clarifications at development and production stage under PSC will help early monetisation of hydrocarbon discoveries.

Discoveries, mostly of Cairn, ONGC and GSPC were stuck because of lack of flexibility in timelines.

These included 10 finds of Cairn in Rajasthan which have not been endorsed by DGH.

Besides, FDP approvals for more than two dozen finds are held up for some or the other reason. Fifteen discoveries lie abandoned in areas that have been relinquished by operators.

Pradhan said a National Data Repository which will store information on all sedimentary basins of the country is being pursued on top priority.

"In order to increase the effectiveness of the upstream exploration being undertaken in India, the government is keen to map the seismic data for India's sedimentary basins, and keep it stored, maintained and validated in the NDR which is being set up by DGH. We are hopeful that the NDR will go on trial in a few months," he said.

Also, the Oil Ministry is debating merits of Production Sharing Contract versus Revenue Sharing Contract for exploration blocks.

"This is a complex issue, and we hope to work out and finalise a suitable model for our forthcoming exploration rounds which balances the interests of all stakeholders," Pradhan said.

"We are working on creating a Unified Licensing Policy whereby the same operator is permitted to explore for both conventional oil and gas as well as unconventional hydrocarbons such as CBM and Shale from the same allotted block.

The government is working hard to create a streamlined policy guideline in this regard," he added.

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