India to amend PSC in attempt to boost shale gas and coal-bed methane extraction

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Source: DollarPhotoClub

Under the New Exploration Licensing Policy (NELP) round, oil and gas companies in India may be able to explore and develop shale gas and coal-bed methane (CBM) in their blocks.

The Oil Ministry is currently making amendments to the existing production sharing contract (PSC) under the New Exploration Licensing Policy (NELP) round, to make it possible for oil and gas companies to explore and develop shale gas and coal-bed methane (CBM) in their blocks.

Government sources said they were considering a proposal to allow oil and gas companies the flexibility to exploit these resources in order to fully utilise the hydrocarbon potential of the country.

“Permission for extraction of new hydrocarbon resources from existing oil and gas blocks would come with a rider that all investment in the new exploration activity would be ring fenced and cost will not be clubbed with its existing operations” a senior oil ministry official said.

The PSC for oil and gas allows for cost recovery by oil and gas explorers before they pay the government a share of revenue. The Directorate General of Hydrocarbons (DGH) manages petroleum resources, monitors PSCs, and assists the government in auctioning oil and gas exploration fields.

There have been 9 rounds of bids concluded under NELP so far, with 254 exploration blocks signed under PSC. 210 discoveries have been made in 60 blocks, 106 were natural gas and 104 crude oil, with 20 of those blocks currently producing oil and 10 gas. Production from these discoveries is less than 15 million metric standard cubic metres per day of gas and 2,00,000 barrels of oil per day.

With India’s energy import bill expected to double from around $150 billion to $300 billion by 2030, the government may well shift to an open acreage policy, allowing companies to fully exploit any resource that falls within their exploration area.

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