To help monetize about 2.6 trillion cubic feet of gas reserves, the government has cleared 30 projects of firms like Cairn India and ONGC. This development finally puts an end to months of logjam over discoveries held up in contractual dispute.
Also in an encouraging development for the sector, the Oil Minister, Dharmendra Pradhan unveiled that the government has approved a policy framework for relaxation, extensions and clarifications in timelines which would grant operational flexibility to help produce oil and gas from several discoveries that are mired in contractual disputes. Presently, the Production Sharing Contract (PSC) between the government and the explorer has rigid timelines for each stage of exploration and actions have been initiated against firms even if deadlines have been missed by a day.
However, with the new policy framework, 3-6 months extensions in the current 18-60 month time-frame for submission of declaration of commerciality (DoC) of discoveries, which is prerequisite before investment plans can be finalized, has been approved by the Ministry. Besides, the deadline for submission of investment plan for the discoveries too is proposed to be extended by up to six months.
PSC provides for time period for submission of field development plan (FDP) for hydrocarbon discovery after DOC and has no provision for extension of this time period and non-acceptance of FDP due to late submission results in non-monetization of discoveries. But, the policy framework for relaxations, extensions and clarifications at development and production stage under PSC would help early monetization of hydrocarbon discoveries.