| Country is staring at a historic opputunity
Posted: 10 Mar 2016 11:37 PM PST GAIL (India) Limited’s Chairman and Managing Director, Mr. BC Tripathi speaks to Fortune India about the great opportunity ahead in the gas industry. Click the image the read the complete interview |
| Cabinet approves Pradhan Mantri Ujjwala Yojana – Scheme for Providing Free LPG connections to Women from BPL Households
Posted: 10 Mar 2016 04:37 AM PST New Delhi; March 10, 2016 The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has approved Pradhan Mantri Ujjwala Yojana – Scheme for Providing Free LPG connections to Women from BPL Households. Under the scheme, Rs 8000 crore has been earmarked for providing five crore LPG connections to BPL households. The Scheme provides a financial support of Rs 1600 for each LPG connection to the BPL households. The identification of eligible BPL families will be made in consultation with the State Governments and the Union Territories. This Scheme would be implemented over three years, namely, the FY 2016-17, 2017-18 and 2018-19. This is the first time in the history of the country that the Ministry of Petroleum and Natural Gas would implement a welfare scheme benefitting crores of women belonging to the poorest households. In our country, the poor have limited access to cooking gas (LPG). The spread of LPG cylinders has been predominantly in the urban and semi-urban areas with the coverage mostly in middle class and affluent households. But there are serious health hazards associated with cooking based on fossil fuels. According to WHO estimates, about 5 lakh deaths in India alone due to unclean cooking fuels. Most of these premature deaths were due to non-communicable diseases such as heart disease, stroke, chronic obstructive pulmonary disease and lung cancer. Indoor air pollution is also responsible for a significant number of acute respiratory illnesses in young children. According to experts, having an open fire in the kitchen is like burning 400 cigarettes an hour. Providing LPG connections to BPL households will ensure universal coverage of cooking gas in the country. This measure will empower women and protect their health. It will reduce drudgery and the time spent on cooking. It will also provide employment for rural youth in the supply chain of cooking gas. In this direction, Finance Minister in Budget speech on 29.2.2016 had announced a budgetary provision of Rs. 2000 crore for 2016-17 to provide deposit free LPG connections to 1.5 crore women belonging to the Below Poverty Line (BPL) families. Further, the Budget announced that the Scheme will be continued for two more years to cover 5 crore households. |
| Policy for the Grant of Extension to the Production Sharing Contracts signed by Government awarding small, medium sized and discovered fields to private Joint Ventures
Posted: 10 Mar 2016 04:35 AM PST New Delhi; March 10, 2016 The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has approved a policy for grant of extension to the Production Sharing Contracts for small and medium sized discovered fields. This extension policy deals with 28 fields. Of these 27 fields (small and medium sized fields) were awarded as a result of two rounds of bidding during 1991 to 1993, and one (PY-3) was separately put to bidding as discovered field. For many of these fields the recoverable reserves are not likely to be produced within the remaining duration of contract period of these PSCs. Further, in certain fields where additional recovery of hydrocarbons can be obtained only through capital intensive Enhanced Oil Recovery / Improved Oil Recovery (EOR/IOR) Projects, the payback period would extend beyond the current duration of PSC. The Government share of Profit Petroleum during the extended period of contract shall be 10% higher for both small and medium sized fields, than the share as calculated using the normal PSC provisions in any year during the extended period and hence will vary from year to year based on Investment Multiple (IM) /Post Tax Rate of Return (PTRR). During the extended period of Contract, the royalty and cess shall be payable at prevailing rates (of nomination regime). Royalty and cess will be payable by all the contractors in proportion to their participating interest. This will lead to additional government revenue of Rs. 2890 Crores on account of additional royalty and cess as compared to present concessional regime in these blocks. Besides these fiscal terms and conditions, the policy brings out detailed guidelines regarding pre-requisites for grant of extension, criterion for evaluation of request, time frame for consideration of request, duration of extension, seat of arbitration etc. Production Enhancement: The policy for 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 (around 53000 Crore). The monetization of these reserves would require an additional investment of USD 3 to 4 Billion. Employment Generation Potential: The extension of these contracts is expected to bring extra investments in the fields and would generate both direct (related to field operations) and indirect employment (related to service industry associated with these fields). The extension of contracts would also envisage that the present employment levels in these fields are maintained for a longer period of time. Presently, medium sized fields are employing around 300 personnel for field operations while for small sized fields this would be around 40 to 60 persons. The investments in these fields may also lead to construction and laying of facilities which would employ several unskilled labourers, over and above the skilled labourers. Transparency and Minimum Government and Maximum Governance: With a view to enable the E&P companies to take investment decisions for exploitation of the remaining reserves this extension policy has been approved so as to grant extensions in a fair and transparent manner. The policy aims at bringing out clear terms of extension so that the resources can be expeditiously exploited in the interest of energy security of the country and improving the investment climate. |
| Hydrocarbon Exploration and Licensing Policy (HELP)
Posted: 10 Mar 2016 04:33 AM PST New Delhi; March 10, 2016 The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the Hydrocarbon Exploration and Licensing Policy (HELP). Four main facets of this policy are:
iii. easy to administer revenue sharing model and
The decision will enhance domestic oil & gas production, bring substantial investment in the sector and generate sizable employment. The policy is also aimed at enhancing transparency and reducing administrative discretion. The uniform licence will enable the contractor to explore conventional as well as unconventional oil and gas resources including CBM, shale gas/oil, tight gas and gas hydrates under a single license. The concept ofOpen Acreage Policy will enable E&P companies choose the blocks from the designated area. Present fiscal system of production sharing based on Investment Multiple and cost recovery /production linked payment will be replaced by a easy to administer revenue sharing model. The earlier contracts were based on the concept of profit sharing where profits are shared between Government and the contractor after recovery of cost. Under the profit sharing methodology, it became necessary for the Government to scrutinize cost details of private participants and this led to many delays and disputes. Under the new regime, the Government will not be concerned with the cost incurred and will receive a share of the gross revenue from the sale of oil, gas etc. This is in tune with Government’s policy of “Ease of Doing Business”. Recognising the higher risks and costs involved in exploration and production from offshore areas, lower royalty rates for such areas have been provided as compared to NELP royalty rates to encourage exploration and production. A graded system of royalty rates have been introduced, in which royalty rates decreases from shallow water to deepwater and ultra-deep water. At the same time, royalty rate for onland areas have been kept intact so that revenues to the state governments are not affected. On the lines of NELP, cess and import duty will not be applicable on blocks awarded under the new policy. This policy also provides formarketing freedom for crude oil and natural gas produced from these blocks. This is in tune with Government’s policy of “Minimum Government –Maximum Governance” |
| Decision on Marketing including Pricing freedom for the gas to be produced from Discoveries in High Pressure-High Temperature, Deepwater and Ultra Deepwater Areas
Posted: 10 Mar 2016 04:31 AM PST New Delhi; March 10, 2016 The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has approveda 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. The policy guidelines would be applicable to future discoveries as well as existing discoveries which are yet to commence commercial production as on 1.1.2016. However, in case of existing discoveries which are yet to commence commercial production as on 1.1.2016, if there is pending arbitration or litigation filed by the contractors directly pertaining to gas pricing covering such fields, this policy guideline shall be made applicable only on the conclusion/ withdrawal of such litigation/ arbitration and the attendant legal proceedings. All gas fields currently under production will continue to be governed by the pricing regime which is currently applicable to them. The ceiling price in US $ per mmbtu (GCV) shall be the, lowest of the (i) Fuel oil import landed price (ii) Weighted average import landed price of substitute fuels (0.3 x price of coal + 0.4 x price of fuel oil + 0.3 x price of naphtha) and (iii) LNG import landed price, whichever is lower. The landed price-based ceiling will be calculated once in six months and applied prospectively for the next six months. The price data used for calculation of ceiling price in US $ per mmbtu (GCV) shall be the trailing four quarters data with one quarter lag. Director General of Petroleum Planning and Analysis Cell (DG, PPAC) under the Ministry of Petroleum and Natural Gas will notify the periodic revision of gas price ceiling under these guidelines. Production Enhancement: The decision is expected to improve the viability of some of the discoveries already made in such areas and also 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 28.35 Billion USD (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.
Employment Generation: The decision is expected to result into monetization of the 28 discoveries mentioned above which can result into substantial investment by the contractors. There would be substantial employment generated during the development phase of these discoveries and a part of it would continue during the production. ONGC has estimated that in the development of discoveries in the block KG-DWN-98/2, there would be deployment of 3850 direct skilled labours. Besides, these there would be around 20,000 persons required during the construction phase. GSPC presently in the block KG-OSN-2001/3 is deploying around 690 personnel in the block. Transparency and Minimum Government and Maximum Governance: Government will not interfere in the price fixation for every block covered under the policy. Provision of ceiling to balance the requirements of consuming sectors Incentivize upstream investment and not getting into unnecessary details. |
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