Press Information Bureau
Government Of India
Ministry of Petroleum & Natural Gas
(27-April, 2016 16:49 IST )

Shifting to Hydrocarbon Exploration Licensing Policy (HELP)

The Minister of State (I/C) for Petroleum & Natural Gas Shri Dharmendra Pradhan informed the Rajya Sabha in a written reply today that New Exploration Licensing Policy (NELP) has been operational since 1997. During the last two decades, various operational issues emerged while administering the contracts under NELP regime leading to many disputes with the operators, which inter-alia include - cost recovery limit, micromanagement by the Management Committee, procurement issues, methodology adopted for calculation of investment multiple, no incentive for the operator to keep costs low adversely affecting profit petroleum. Observations were also made by the Chawla Committee on “Allocation of Natural Resources” and Rangarajan Committee on “Production Sharing Contract Mechanism in Petroleum Industry” bringing out various deficiencies in the existing Production Sharing Contract under NELP. Based on the experience of administering NELP and deficiencies and shortcomings observed in its implementation, the Government brought out the new Policy keeping in view the principles of ‘ease of doing business’ and ‘minimum government, maximum governance’.

Petroleum and Natural Gas Rules (PNG Rules) 1959, define Petroleum as “naturally occurring hydrocarbons in a free state, whether in the form of natural gas or in a liquid, viscous or solid form”. There is no differentiation between conventional oil & gas and unconventional oil & gas such as CBM, shale oil & gas, tight gas and gas hydrates as all these are hydrocarbons in free state obtained from different geological formations. Therefore, single license for exploration of all types of hydrocarbon is considered under HELP.

The investment and subsequent increase in Government revenue will depend on the response of the investors to the bidding to be undertaken under HELP.

Under HELP, contractor will have freedom for pricing and marketing of oil & gas produced from these blocks. However, under NELP, pricing of oil and gas was subject to the relevant provisions of production sharing contract.

(Release ID :142351)

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