Petro-chem CEOs delegation asks govt to accelerate exploration

Petro-chem CEOs delegation asks govt to accelerate exploration

A high-power delegation of top officials from Reliance Industries, Cairn India and BG India today asked Oil Minister S Jaipal Reddy to accelerate oil and gas explorations by removing bureaucratic hurdles.

RIL Executive Director P M S Prasad, Cairn India CEO Rahul Dhir and BG India head Walter Simpson, among others in the delegaion, also urged the government to expedite investments into the petro-chem sector.

"The delegation highlighted need to reassess the policy framework and hasten decision-making. It suggested solutions to expedite investments into the sector and to ensure that companies have access to off-shore drilling technologies," a CII press statement said here.

The CEOs said delays were caused by lack of inter- ministerial coordination on policy/regulatory issues, and the ministry should look at offering blocks for exploration "only after all regulatory and statutory approvals are in place."

As exploration for hydrocarbons is a high risk business, they said it was important to not burden it with additional risk of fiscal uncertainty.

"Sanctity of the legally binding contracts should be maintained," the statement said, adding, the seven-year tax holiday should be extended to natural gas production as in case of oil.

The delegation also included Niko Resources India Managing Director Larry Fisher, Jubilant Energy CEO Ajay Khandelwal and Hazira Group of Companies Managing Director Nitin Shukla.

They demanded creation of an independent empowered regulator for the industry, saying that demarcating clearly the roles of a regulator and policymakers will pave the way for accelerating exploration, development and production projects in the oil and gas sector.

"Transition to a gas-based economy with marketing and pricing freedom would give flexibility to manage technical and commercial risks," they felt.

The industry association pointed out that the proposed gas price pooling mechanism under Production Sharing Contract (PSC) can potentially distort price discovery. In addition, a Declared Good Status for natural gas, again a long standing demand of the industry, will avoid varying sales tax /VAT in different states.

The Gas Marketing should be as per the PSC which is an arms length market determined price.

The delegation also called for transition to Open Acreage Licensing Policy (OALP) to further open up exploration. Currently, New Exploration Licensing Policy (NELP) is restricted primarily to blocks identified by Directorate General of Hydrocarbons (DGH).
OALP could identify more prospects as sufficient data is already available.