By TIOL News Service

NEW DELHI, OCT 19, 2014: THE Cabinet Committee of Economic Affairs, chaired by the Prime Minister Mr Narendra Modi, yesterday approved the proposal of Ministry of Petroleum and Natural Gas regarding “Policy Framework for Relaxations, Extensions and clarifications at the Development and Production stage under PSC regime for early Monetization of hydrocarbon discoveries”.  There is a reform initiatives which would help in monetization of some of the pending discoveries, lead to resolution of various long pending operational issues which are hampering E&P operations and create better climate for investment.  The salient features of this Reform Measure are as follows:-

(i) Extension of Appraisal period for submission of Declaration of Commerciality (DOC) in respect of Hydrocarbon discovery.

(ii) Extension of time period for submission of Field Development Plan (FDP) after review of DOC by the Management Committee.

(iii) Reduction in Minimum Work Program (MWP) in case a block or its part is not available for exploration activities consequent to denial of permission by Government Agencies.

(iv) Swapping of 2D and 3D Seismic Minimum Work Programme, on the request of the operator.

(v) In cases where the committed Minimum Work Programme of any particular exploration phase is not completed, entry into subsequent exploration phases, would be permitted after paying cost of unfinished MWP of previous phases.

(vi) Condoning delays in submission of notice for entering into next phase.

(vii) Condoning delays in submission of Annual Work Programme and Budget and the Appraisal work programme.

(viii) Permission for drilling of Appraisal Wells after submission of DOC.

(ix) Probing additional reservoirs during appraisal programme.

(x) Acceptance of discoveries for which notification to the Government has not been made are also notification for testing has not been provided as prescribed.

These changes do not change the basic structure of the PSC and have been approved in the overall interest of the energy security of the country.

These proposals are expected to yield the following benefits:

++ Monetization of some of the discoveries which are struck because of expiry of timelines.  Some examples are enclosed.

++ Additional discoveries in the appraisal period.

++Improvement in investment climate because of resolution of disputes between the contractors and the Government.

++ Enhancement of production of oil and gas from these blocks.

++ Preparation of a more robust FDP.

Examples of Discoveries which would be Monetized because of these Relaxations

1. CB-ON-2 (GSPC); Tarapur-6; GSPC ; (Oil discovery); OIIP – 11.205 (in MMBBL).

2. AA-ONN-2001/1 Khubal-4; ONGC; (Gas discovery); GIIP-35;(in BCM)

3. KG-ONN-2003/1; Nagalanka-1Z; Cain India Limited; (Oil discoveries); OIIP – 41.21 (in MMBBL). Gas – 5.93 BCF

4. KG-ONN-2003/1 Nagalanka-SE-1Z; Cairn India Limited; OIIP-195.09; (in MMBBL)

5. CB-ONN-2000/1:SE-1:GSPC (Oil discovery); OIIP-2.11; (in MMBBL)