After the lacklustre response from foreign participants in the earlier NELP rounds, the government is looking to revamp its oil and gas exploration policy before the NELP-X round of auction.
The government is planning to initiate the 10th round of auction under the new exploration licensing policy (NELP) after making changes in the production sharing contracts to attract more domestic and foreign investors.
?We look forward to putting a more investor-friendly regime before the next round. We have referred the issue to a committee headed by C Rangarajan, chairman of Prime Minister?s Economic Advisory Council,? petroleum minister S Jaipal Reddy said at the inauguration of the 10th Petrotech Conference.
The committee is examining the existing production sharing contracts in a bid to put in place an amicable cost-recovery mechanism. The panel is expected to submit its report to the government in the next couple of weeks.?
The oil ministry earlier entered into an argument with private explorer Reliance Industries on cost recovery where the production sharing contract (PSC) allows for operators to recover 100% of the capital and operating expenditure on oil and gas field and it does not link the cost recovery to production.
According to the oil ministry, the exploration and production activities attracted about $ 20 billion investments in NELP blocks so far, with a total 111 discoveries (40 oil and 71 gas) having been made in 38 NELP blocks, including major gas discoveries in East Coast.?
It is to be seen if the panel suggests continuation of the existing production sharing contracts with minor changes in the cost-recovery mechanism or shift to a production-linked payment regime. ?If PSC is to be improved or replaced, the Cabinet has to clear it,? Reddy said.
