Centre allows faster monetisation of oil and gas discoveries
The contracts give licensees up to eight years to explore
The Central government has allowed companies to monetise oil and gas discoveries without undergoing the time-consuming procedure of government approvals for field development plans and other bureaucratic process.
There are no restrictions on monetisation of discovery at an early stage within these timelines (provided under the contracts); rather it will be in public interest that a discovery is monetised early as a step towards energy security of the country.
The contracts give licensees up to eight years to explore. Following a discovery, licensees undertake appraisal, development and production sequentially.
The new guidelines will help cut this sequence, save time and bring in early revenues for licensees as well as the government, according to an industry executive. A company will be able to start production and sale from a discovery even during the exploration phase.
The contractor may develop and monetise such early stage discovery/discoveries before completion of appraisal, declaration of commerciality (DoC) and submission of development plan (DP) /field development plan (FDP), etc in blocks under exploration period.
The contractor will have to submit to DGH its plan to develop that specific discovery, along with estimated cost and production profile. It will also have to seek petroleum mining lease (PML).
The output from such discoveries will be treated as commercial production and the contractor will be expected to pay all levies as well as the share of profit petroleum or revenue as per the contract.