KOLKATA (miningweekly.com) - The Indian government is likely to consider giving natural gas producers the option to charge a premium for reserves located in difficult terrain, including deep-sea, but will refrain from dismantling the administered price regime across the board.
According to an official in the Oil and Natural Gas Ministry, the final decision to incentivise gas discoveries in difficult terrain would be taken by the Cabinet Committee for Economic Affairs (CCEA).
Also, given the differences between various stakeholders on the structure of the premium, based on the level of difficulty in exploiting a resource, various options would be placed before the CCEA and the apex decision body would make a final call, the official said, declining, however, to divulge details on the premium options on the table.
However, it was not yet clear whether the CCEA would consider the Ministry’s proposal to restrict producers to charging a premium for discoveries made post-2014 or whether all reserves where production had already started would be eligible.
Private exploration and production (E&P) majors, including Reliance Industries, have been pushing for the option to charge a premium even from older discoveries, and the lobbying intensified after a crash in international oil and gas prices; however, the government was still undecided on the issue, the official said.
E&P majors such as Reliance and government-owned and -operated ONGC Limited said in a communication to the Ministry, that all operators and consortiums should be ensured a level playing field in terms of pricing.
They contended issues of existing operators needed to be addressed and future investments should not be incentivised selectively, as future investment decisions were always based on feasibility, and terms and conditions of existing contracts between the government and investor.