New Delhi - In major reforms, the government on Thursday approved pricing freedom to help monetise Rs 1.8 lakh crore of gas discoveries, brought in a more liberal fiscal regime for oil and gas exploration and decided to amend the mining laws to allow companies to more freely sell assets.In a series of decisions aimed at attracting investment in the nation's oil and gas industry, the Cabinet headed by Prime Minister Narendra Modi approved pricing freedom for undeveloped gas discoveries in difficult areas but with a cap, a move that would result in 85 per cent jump in rates to $7.08 per million British thermal unit at current prices.
The price, which would not apply to those fields under litigation, would help monetise 6.75 trillion cubic feet of reserves in 28 discoveries that can add up to 35 million standard cubic meters per day of gas production for 15 years, Oil Minister Dharmendra Pradhan told reporters here.
India currently produces around 90 mmscmd of gas, hardly meeting 40 per cent of the needs.
Oil and Natural Gas Corp (ONGC), Reliance Industries and GSPC will get freedom to price gas from its idle discoveries in deepsea, ultra deepsea and high-pressure and high-temperature areas.
But this will be subject to a cap which would be lower of the one-year average cost of imported cost of fuel oil, or landed price of liquefied natural gas (LNG) or weighted average of imported price of coal, fuel oil and naphtha. Based on 2015 prices, the lowest of these averages comes to $7.08.
Pradhan said the Cabinet also approved replacing the controversial Production Sharing Contract (PSC) with simpler revenue-sharing regime for all future field auction.
A single licence for exploration and production of all forms of hydrocarbon in blocks bid out to firms offering the maximum revenue to the government would be given. Blocks would be allocated under open-acreage policy, wherein companies can submit bids for areas of their choice.
Also, the Cabinet Committee on Economic Affairs approved a policy for grant of licence extension to small and medium sized discovered fields like Panna/Mukta Tapti of BG Group of UK by 10 years on revised terms. The policy, however, kept out extension of Cairn India's prolific Rajasthan block.
"Our aim is to attract investments, boost production and take away government discretion," Pradhan said.
The Cabinet also approved amendment to the Mines and Minerals (Development and Regulation) Act, 1957 to allow sale of captive mineral mines, not granted through auction, as well as allow mergers and acquisitions.