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    India Looks to Monetise Discoveries Faster


The government is taking steps to enable earlier and faster monetisation of oil and gas discoveries under production and revenue sharing contracts.

by: Shardul Sharma

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India Looks to Monetise Discoveries Faster

The Indian government has eased rules to enable the earlier and faster monetisation of oil and discoveries under production sharing contracts (PSCs) and revenue sharing contracts (RSCs), upstream regulator Directorate General of Hydrocarbons (DGH) said on June 25 in a statement.

In terms of the contractual provisions, the timelines given under the article on ‘discovery, development and production’ or similar articles of the PSC or RSC are the maximum timelines for development and monetisation of discoveries.

“There are no restrictions on monetisation of discovery at an early stage within these timelines; rather it would be in public interest that a discovery is monetised early as a step towards energy security of the country,” DGH said.    

Accordingly, the regulator said, the contractor may develop and monetise such early-stage discoveries before completion of appraisal, declaration of commerciality and submission of a development plan in blocks under exploration period.

This is subject to certain conditions, however. Firstly, pursuant to a discovery made in the block, the contractor may submit to DGH its early development plan, along with relevant details including development plan, estimated cost and production profile, and request a petroleum mining lease (PML). Such request for PML may be processed at DGH as per the applicable petroleum & natural gas rules for granting PMLs.

Secondly, all other activities prescribed in the PSC or RSC article on ‘discovery, development and production’ or similar articles, shall be carried out in accordance with the contractual provisions and within the timelines prescribed in the contract.

Thirdly, at the time of approval of DP or FDP for development of the total block or development area, all such discoveries for which PMLs would be granted for early monetisation shall be subsumed in the total development area and PML of the block or development area, as the case may be.

Fourthly, the production from such discoveries shall be considered as commercial production and payment of statutory levies, cost recovery, sharing of profit petroleum, revenue sharing, shall be as per provisions of respective PSCs or RSCs and other extant rules, DGH said.

India, which is among the world’s biggest oil and gas consumers, is looking to cut dependence on imports by expanding domestic production. The government is trying to simplify rules in order to encourage exploration.