Oil Ministry clears development of discoveries worth Rs 1.5 lakh cr

New Delhi: Ending months of logjam over discoveries mired in contractual disputes, the Oil Ministry has used the recently granted freedom to clear development of oil and gas discoveries worth about Rs 150,000 crore.  The ministry has used the flexibility granted by the Cabinet in October 2014 in deciding on timelines for development of oil and gas discoveries to clear as many as 30 pending cases. This would enable early monetisation of oil and gas discoveries in two blocks each of Gujarat State Petroleum Corp (GPSC) and Oil and Natural Gas Corp (ONGC) and one of Focus Energy, according to a note by upstream regulator DGH. This is expected to result in exploitation of about 34.06 million barrels of oil and about 0.731 trillion cubic feet of gas reserves valued at about Rs 35,000 crore considering oil price of $50 per barrel and gas price of $5.61 per million British thermal unit. “This will also help in probing additional reservoir and submission of robust field development plans. The estimated reserves of the discoveries where additional probing has been allowed is to the tune of about 172.34 million barrel of oil and 1.934 Tcf of gas reserves as assessed by the operators valued at more than Rs 116,000 crore,” it said. The Cabinet had provided operational flexibility in enforcing contracts by way of relaxing some of timelines prescribed for discoveries so that exploration and production (E&P) activities do not suffer on account of excessive rigidity in decision making. The Production Sharing Contract (PSC) 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. Three-to-six month extension in the current 18-60 month timeframe for submission of declaration of commerciality (DoC) of discoveries, a prerequisite before investment plans can be finalised, has been approved, the note said. 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 (FDP) 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 DGH has been given flexibility to accept discoveries for which operators had failed to provide prior notification to the government. “There were 12 blocks where clearances were not accorded in entire block area or in part of block area because of overlapping with special economic zone, reserve forest, naval exercise area, DRDO danger zone, national parks and firing range of Defence. The cases in 11 blocks have been resolved and the case in one block is under consideration,” the note said. PTI