Faced with an investment challenge in the upstream oil and gas production sector, the Union Cabinet on Thursday announced major reforms to woo foreign investors and boost the performance of the sector.
The Cabinet Committee on Economic Affairs (CCEA) approved a much-awaited policy, granting pricing and marketing freedom to companies exploiting hydrocarbon reserves in difficult geological areas. The aim is to ramp up domestic output to cut energy imports. It approved a new Hydrocarbon Exploration Licensing Policy (HELP) that will replace the existing New Exploration Licensing Policy (NELP) regime with more investor-friendly provisions of revenue sharing and open acreage licensing.
Pricing freedom will benefit exploitation of 28 discoveries with 2.6 trillion cubic feet of hydrocarbon reserves located in deep water, ultra deep water and high pressure-high temperature areas, benefiting two of the country's largest upstream companies - Oil and Natural Gas Corporation (ONGC) and Reliance Industries Ltd (RIL).
The policy allowing premium pricing for such areas would cover all the fields where production was yet to start as on January 1, 2016. Besides, it will also benefit an additional 10 discoveries which have been notified and whose potential is yet to be established, said Dharmendra Pradhan, petroleum minister.
Article Source: http://www.business-standard.com/article/companies/govt-lends-help-to-revive-oil-sector-116031100047_1.html
Publication Date: 11 March 2016