Deep sea oil blocks to get higher price

New Delhi: Centre on Thursday took a series of decisions to attract  investment in the nation’s oil and gas industry, including  a new pricing formula for undeveloped gas discoveries from deep sea fields that start production this year, except those under litigation. The oil minister Dharmendra Pradhan said the step will help boost gas output by 35 million standard cubic meters a day and unshackle projects worth  Rs 1.8 lakh crore ($27 billion). The country’s present gas production is around 90 mmscmd. However, the move will also increase the cost of gas.

The government also approved replacing the controversial Production Sharing Contract (PSC) with simpler revenue-sharing regime for all future oil and gas field auctions. The Centre approved a policy for grant of extension to the production sharing contracts for 28 small and medium sized discovered fields.  The reserves which are likely to get monetised during the extended period are of the order of 15.7 million metric tonne of oil and 20.6 MMT of oil equivalent of gas. The reserves associated with this move would lead to monetisation of reserves worth $8.25 billion (around Rs 53,000 crore). The monetisation of these reserves would require an additional investment of $3 to $4 billion.

The CCEA on Thursday approved a proposal to grant marketing including pricing freedom for the gas produced from high pressure high temperature, deepwater and ultra deepwater areas. The marketing freedom so granted would be capped by a ceiling price arrived at on the basis of landed price of alternative fuels — liquefied natural gas, fuel oil, naphtha and imported coal. The price will be revised every six months. The policy guidelines would be applicable to future discoveries as well as existing discoveries which are yet to commence commercial production as on 1st  January 2016.