KOLKATA (miningweekly.com) – In a bid to offer explorers the option of maximizing production, India’s Petroleum and Natural Gas Ministry has permitted oil and natural gas exploration projects to extend operations beyond geographically demarcated contract areas in instances where discoveries are contiguous and stretch beyond such demarcated areas.
At the same time, the Director General of Hydrocarbons (DGH) has been empowered to determine “excusable delays and excess cost recoveries” by a contracted exploration agency.
A document titled ‘Policy Framework for Streamlining the Operations, Relaxation and Timelines’, issued by the Ministry, states, “firms can take a petroleum exploration licence area beyond their awarded block boundaries to ascertain the extent of commercial discovery provided such area is not of strategic importance or such area has not been awarded to any other company by the government, nor is it held by any other party, or not on offer by the government”.
The policy document also simplified the process any exploratory firm must undertake to pay for unfinished, but committed exploration and drilling work, before taking up the next phase of production and development, to ensure that such firms are able to quickly complete development and production of the area where exploration had already been completed.
At the same time, to eliminate discretion and delays in determining what constituted “excusable delays” in exploration parameters, without making exploration agencies liable to pay penalties, the policy stipulated that DGH would set up a multidisciplinary committee to review proposals for approval of “excusable delays” based on the specific definition of such delays to be laid down by the regulator.
Under production sharing contracts (PSCs) between exploration contractors and the government, contractors would not be allowed cost recovery unless the DGH multidisciplinary committee ratified that cost increases were due to circumstances that came into existence after the PSC was signed. However, it had now been decided that DGH would be empowered to determine permission for cost recovery in cases of up to 20% excess cost recovery.