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Monday, 04 Apr 2016
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New HELP to boost Oil output

The country currently faces a situation where oil and gas constitutes a major and increasing share of total imports. Oil production has stagnated while gas production has declined. There is a need for concerted policy measures to stimulate domestic production. Keeping in view this objective, the Union Cabinet and the Cabinet Committee on Economic Affairs have recently took major policy initiatives to give a boost to the Petroleum and Hydrocarbon sector.




Advantages of the new policy initiatives



  1. Hydrocarbon Exploration Licensing Policy (HELP): An innovative policy for the future which provides for a uniform licensing system to cover all hydrocarbons such as oil, gas, coal bed methane etc. under a single licensing framework. Contracts will be based on “biddable revenue sharing” wherein bidders will be required to quote revenue share in their bids and this will be a key parameter for selecting the winning bid. The contractor will have the freedom for pricing and marketing of gas produced in the domestic market on arms length basis. A concessional royalty regime will be implemented for deep water and ultra-deep water areas. 

  3. Marketing and Pricing freedom for new gas production from Deepwater, Ultra Deepwater and High Pressure-High Temperature Areas: The decision is expected to improve the viability of some of the discoveries already made in such areas and would lead to monetization of future discoveries as well. The reserves which are expected to get monetized are of the order of 6.75 tcf or 190 BCM or around 35 mmscmd considering a production profile of 15 years. The associated reserves are valued at USD 28.35 billion (approx Rs 1,80,000 crore). The country?s present gas production is around 90 mmscmd. Besides, these there are around 10 discoveries which have been notified and whose potential is yet to be established.

  5. Policy for grant of extension to the Production Sharing Contracts for small, medium sized and discovered fields:The policy for Production Sharing Contract (PSC) extension will lead to production of hydrocarbons beyond the present term of PSC. The reserves which are likely to get monetized during the extended period are of the order of 15.7 MMT of oil and 20.6 MMT of oil equivalent of gas. The reserves associated with this field would lead to monetization of reserves worth USD 8.25 billion (approx Rs 53000 crore). The monetization of these reserves would require an additional investment of USD 3 to 4 billion.


Positive developments for ONGC


Oil and Natural Gas Corporation (ONGC) has unveiled a Rs 34,000 crore investment plan to develop its Krishna-Godavari (KG) Basin fields in Andhra Pradesh. The project will help boost ONGC's oil and gas output by a fifth in about four years. The project will produce its first gas in June 2019 and oil in March 2020.


Further, ONGC has plans to undertake drilling of nine development wells in the KG-OSN-2004/1 and GS-49-2 fields beside creation of other infrastructure in the KG Basin, with an investment of Rs 3,750 crore.


In Jan 2016, ONGC got environmental clearance for drilling 45 development wells and other related infrastructure at Block KG-DWN-98/2, KG offshore, in the KG Basin. In Feb 2016, the Centre's green panel gave approval to ONGC for developing 30 wells and other infrastructure in Tripura, entailing an investment of Rs 758 crore.


Other recent developments in the Hydrocarbon industry


Private explorer, Reliance Industries, is targeting to start production of coal bed methane (CBM) from its Sohagpur (West) block in Madhya Pradesh during April-June FY 17. The initial gas output would be less than 1 mmscmd. The peak output, which may be achieved after 18-24 months of commencing production, is envisaged at 2.5-3 mmscmd.


GAIL India has started drilling its first exploration well on the NELP-IX Block CB-ONN-2010/11 in Cambay basin, Gujarat, on 27 March 2016. The well is situated in Dugari village at Tarapur Tehsil of Anand district. Drilling of the targeted depth of 2,500 meter of this well is scheduled to be completed in 40 to 45 days, followed by testing for another 10 to 15 days.


Quote of the week:

"The new contractual regime for energy exploration is in line with the principle of minimum government and maximum governance"

- Dharmendra Pradhan, Minister of State (IC) for Petroleum and Natural Gas, Government of India


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