Oil Minister wants relaxation of timelines prescribed for discoveries so that exploration & production activities do not suffer on account of excessive rigidity in decision-making.

Seeking to put an end to rigidity in decision-making pertaining to exploration and production (E&P) of oil and gas blocks and unshackle the hydrocarbon potential in the country, the Petroleum and Natural Gas Ministry has decided to move the Union Cabinet to introduce major changes in the production sharing contract (PSC) terms and conditions, a move seen as wooing global oil and gas players.

The Ministry has moved a Cabinet note, accessed by The Hindu, for inter-ministerial consultations to also put in place an Empowered Group and vest it with powers to extend timelines prescribed in the PSC pertaining to appraisal, submission of commerciality, field development plan (FDP) submission and other issues. It would also work to issue clarifications relating to provisions of the PSC and related government policies and instructions. The proposed changes would be applicable to all the discoveries in existing PSCs and future PSCs except where the relinquishment of the block has been done.

Under the proposed changes, in case of extension time for submission of Declaration of Commerciality (DOC) in respect of hydrocarbon discovery, it is proposed to empower the management committee (MC) to grant extension of appraisal period by six months for onland blocks and by 12 months for offshore blocks whenever MC is satisfied with the reasons cited by the operator for such extension. Accordingly, FDP submission date will also get extended.

In case of reduction of minimum works programme (MWP) of blocks overlapping with SEZ, reserve forest, naval exercise areas, DRDO danger zones, national parks, urban areas, firing ranges of police and armed forces where delays take place in execution of the mining lease (ML) due to various reasons, including denial of permission to work from security point of view, it is proposed to permit the contractor to exit the contract without payment of cost of unfinished work programme. They would also be allowed proportional reduction in MWP in 2D, 3D work programme. ``If the delay due to lack of clearances is beyond two years in any of the blocks, then the operator will be given a choice to chose between to exit the project or have proportional reduction in MWP,’’ the Cabinet note states.

Further, to make things smoother for exploration, it is proposed to allow swapping of 2D and 3D MWP with each other in case of technical or logistical reasons. The Cabinet also proposes to have an Empowered Group for interpretation of PSC contracts to be headed by Petroleum Minister, and consist of Principal Advisor (Energy, Planning Commission), finance Secretary, Law Secretary, Petroleum Secretary, Director General of Hydrocarbons (DGH) and Joint Secretary (Exploration) as the member Secretary.

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