POLICY ON REFORMS IN EXPLORATION AND LICENSING SECTOR FOR ENHANCING PRODUCTION OF OIL AND GAS

The policy reforms focus on four major areas.  

1. Increasing exploration activities in unexplored/unallocated areas: 
   • In basins where presently no commercial production is there, exploration blocks would be bid out exclusively on the basis of exploration work programme without any revenue or production share to Government. 
     
     
   • For unallocated/unexplored areas of producing basins, the bidding will continue to be based on revenue sharing basis. An upper ceiling of 50% on biddable revenue share at Higher Revenue Point (HRP) has also been prescribed. 
     
     
   • The policy also provides for shorter exploration period and fiscal incentive for commencement of early production. 
     
     
   • Contractor will have full marketing and pricing freedom for crude oil and natural gas to be sold at arm's length basis. 
     
     
   
   
   
2. Marketing and Pricing Reform for Natural Gas:  
   • To incentivize enhanced gas production, marketing and pricing freedom has been granted for those new gas discoveries whose Field Development Plan (FDP) is yet to be approved. 
     
     
   • Fiscal incentive is also provided on additional gas production from domestic fields over and above normal production. 
     
     
   
   
   
3. Production Enhancement Scheme for Nomination fields: 
   • To enhance production from existing large nomination fields of ONGC and OIL, enhanced production profile will be prepared by both PSUs. New technology, capital and National Oil Companies (NOCs) will be allowed to induct private sector partners. 
     
     
   • Steps will also be taken to increase production from marginal/ small nomination fields. 
     
     
   
   
   
4. Measures will be initiated for promoting ‘ease of doing business’: This will be done through setting up coordination mechanism  and  simplification  of approval of DGH, alternate dispute resolution mechanism etc. 
   
   

Expected Benefits: 

• Massive boost to exploration activities with greater weightage to exploration work programme, simplified fiscal and contractual terms. 
  
  
• Early monetization of discoveries also by extending fiscal incentives. 
  
  
• Incentivizing  production including through marketing and pricing freedom. 
  
  
• Induction of latest technology and substantial capital. 
  
  
• More functional freedom to NOCs for collaboration and private sector participation. 
  
  
• Streamlining approval processes and promoting ease of doing business.