Need for transparent exploration regime: Reddy
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India needs a simpler, more transparent and less intrusive regime for expediting oil and gas exploration, oil minister S Jaipal Reddy has said.
The world's fourth-biggest oil importer wants to expedite domestic oil and gas hunt to cut its ballooning import bill and widening budget deficit, but its more than a decade-old New Exploration Licensing Policy (NELP) has met with lukewarm response from global biggies.
"A simpler, more transparent and less intrusive regime for expediting the exploration of the sedimentary basins of the country is the need of the hour," Reddy said at the World Energy Forum in Dubai.
Nine rounds of auction under NELP since 1999 have been lacklustre with global biggies staying away because of issues like tight regulations on pricing, delays in getting approvals and changing fiscal regime.
Reddy, whose speech was officially released here, said that before the next round, the government plans to put in place a new exploration licensing regime. "A high level expert committee has been constituted, with the task of suggesting improvements to the policy. We are confident of announcing the new policy in the next few months," he said.
The committee headed by Prime Minister's Economic Advisory Council chairman C Rangarajan is expected to submit recommendations on revamp of the exploration policy as well as the terms of contracts signed by companies to explore and produce oil and gas in next few days.
Its suggestions would be taken to the Cabinet for approval. Once Cabinet clears the changes, the 10th round of NELP would be launched.
"Nine rounds of NELP have resulted in 254 contracts and 114 hydrocarbon discoveries," he said urging oil majors to take advantage of the new policy regime and enhance their engagement and investment in India. Current Production Sharing Contracts (PSCs), signed under the NELP of 1999, provide for explorers to first recover all of their capital and operating expenditure from oil and gas revenues before sharing profits with the government as per a specific formula.
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