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Recently, Cabinet has approved new Hydrocarbon Exploration and Licensing Policy (HELP), which will replace New Exploration Licensing Policy (NELP), for Oil and Gas exploration, Will that make any change in oil and gas exploration regime? Let’s see this in brief!

Let’s first take an overview of New Exploration Licensing Policy (NELP)

  • New Exploration Licensing Policy (NELP) was created in 1997
  • To provide an equal platform to both Public and Private sector companies in exploration and production of hydrocarbons
  • Directorate General of Hydrocarbons (DGH) was a nodal agency for its implementation
  • Between 1998 and 2012, there were 9 rounds of oil and gas block auction (NELP 1 to NELP 9)
  • Although 126 discoveries have been made in 41 active blocks, commercial production has commenced only in 3 blocks
  • Reasons for the delay vary from inadequate technology to delayed regulatory approvals
  • Today, only 2 blocks, the Reliance Industries-operated KG D6 block and the Gujarat State Petroleum Corporation-operated Cambay onshore block, are producing oil or gas

<Let’s Move towards new version of Policy>

What are the Main facets of HELP policy?

  • Uniform License for exploration and production of all forms of hydrocarbon
  • Open acreage policy
  • Easy to administer Revenue sharing model
  • Marketing and pricing freedom for the crude oil and natural gas produced

What is Unified Licensing Policy?

  • As the name suggests, all licenses are unified i.e. this allows exploration and production of all hydrocarbons such as oil, gas, coal bed methane and shale oil and gas in a block
  • Contrast this with NELP, which required separate licensing for different types of hydrocarbons time and cost overruns

Concept of Open Acreage Policy

  • Contractors will now have the flexibility to request bidding for any block on-tap under Open Acreage Licensing
  • Earlier, they had to wait for the government to auction blocks, and could only bid for blocks that were put up for auction
  • This will enable Exploration & Production (E&P) companies choose the blocks from the area they like

What’s new in Revenue-sharing formula?

  • Present system is that of of production sharing based on Investment Multiple and cost recovery/ production linked payment
  • Under the new revenue-sharing formula, contractors will share the revenue from the time first drop of oil/gas starts flowing from the field.

How this policy of revenue sharing is in tune with Ease of Doing Business?

  • Earlier, under the Production/profit Sharing Methodology, it became necessary for the Govt to scrutinize cost details of private participants and this led to many delays and disputes<as govt was given its share only after all the costs were recovered, govt had to make sure that private parties do not inflate cost to reduce govt’s share>
  • To prevent loss of government revenue, there were requirements for Government approval at various stages to prevent the contractor from exaggerating the cost
  • Activities could not be commenced till the approval was given.  This process became a major source of delays and disputes
  • Under the new regime, the Govt will not be concerned with the cost incurred and will receive a share of the gross revenue from the sale of oil, gas etc.
  • So, no CAG audit, no approvals required, no micromanagement by govt.
  • Companies would worry less about the govt and focus more on operations
Parameter Production sharing Contract Revenue Sharing Contract
Risk Investor can take higher risk as he will be able to recover investment before sharing with govt Won’t take higher risk, has to share revenues from the first drop of oil
Govt interference Higher as costs have to be rechecked minimal
Useful for High risk high cost environment such as deep fields Low cost environment, fully explored blocks
Recommended by Kelkar Committee Rangrajan Committee
Govt policy NELP HELP

India remains one of the least explored countries and could hold large potential resources. For example, 15 basins out of a total 26 sedimentary basins in India spread over on-land, offshore and deepwater, are estimated to hold prognosticated hydrocarbon resources of over 200 billion barrels of oil equivalent. Hence some recommend Production sharing contracts for India with investing capacity to manage such contracts better.

 Graded system of royalty to boost investment

  • The current policy regime, in fixing royalties, does not distinguish between shallow water fields (lower costs and risks) and deep/ultra-deep water fields(much higher costs and risks)
  • Under the new policy, there is lower royalty rates for difficult areas compared to NELP royalty rates
  • A graded system of royalty rates have been introduced, in which royalty rates decreases from shallow water to deepwater and ultra-deep water
  • Royalty rate for onland areas have been kept intact so that revenues to the state governments are not affected

Pricing and Marketing Freedom

At present, natural gas price is determined by taking into account the average of prices in gas-surplus countries such as the US, Canada and Russia, but proposed formula is market-efficient

  • New Policy allows pricing freedom to companies with a cap on prices to protect consumer interest
  • Gas price will be the lowest of imported fuel price; weighted avg of naphtha, coal and fuel oil; and the price of imported LNG
  • Policy also gives marketing freedom
  • The new price will apply to undeveloped gas discoveries and not on currently producing fields

So, new price formula combined with lower royalty rates will help in undeveloped gas discoveries in deep-sea, ultra-deep sea and high-temperature, high-pressure fields. Increased investment and competition will eventually bring down gas prices as well as import dependence of India and lead to the development of a competitive gas market in the country.

From NELP to HELP

UNIFORM Licensing Policy One license for E&P of all the hydrocarbons from a block
Open acreage system Licenses on tap
Revenue sharing model Minimal govt interference
Marketing and pricing freedom Sell to whoever you want at market determined prices subject to a ceiling price

 

How Contract extension will help to remove further obstacles?

  • The grant of extension of production sharing contracts for 28 small, medium sized discovered fields is welcome
  • Because, this move will remove uncertainty and help contractors plan their investments in these blocks
  • The extension will be for 10 years, both for oil and gas fields or economic life of the field, whichever is earlier

Way forward

  • India currently produces around 90 mmscmd (Million Metric Standard Cubic Meter Per Day) of gas, hardly meeting 40 per cent of the needs (imports majority of gas from Qatar)
  • Oil and Natural Gas Corp (ONGC), Reliance Industries and Gujarat State Petroleum Corporation(GSPC) will now get freedom to price gas from its idle discoveries in deep sea, ultra deepsea and high-pressure and high-temperature areas
  • So, overall we can say that, Govt’s target for O&G seems to be on track, to attract more investments, boost production and take away govt discretion from Oil and Gas Exploration

 

Published with inputs from Arun

Any doubts?


  1. Khushwant Singh

    Very technical topic,, this article did not make things easy for non technical readers and arn’t able to grasp it !!!

  2. Observer

    is bombay high not producing oil?

India to launch gas trading hub

Note4students

Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Natural gas trading hub, Petroleum and Natural Gas Regulatory Board

Mains level: India’s ambition of becoming a gas-based economy and various issues associated with it


News

Developing an ecosystem for gas trading

  1. The government plans to launch a natural gas trading hub by October
  2. It will also be creating an Indian gas benchmark which will spark a surge in consumption of the cleaner-burning fuel
  3. Oil regulator Petroleum and Natural Gas Regulatory Board (PNGRB) has sought bids to hire a consultant to help develop a regulatory framework for operationalizing the gas trading/exchange hub

What’s in the offing

  1. In order to further boost the consumption of natural gas in the country, Government is considering the establishment of a Gas Trading Hub / Exchange (GTHE)
  2. Here natural gas could be traded and supplied through a market-based mechanism instead of multiple formula driven prices

Current mechanism

  1. Currently, the government fixes the price of the bulk of domestically produced natural gas
  2. The rate is arrived at using price prevalent in gas-surplus nations of US, Canada, UK, and Russia

Internationally accepted practice

  1. A hub is used as a central pricing point for a network that could aid better price discovery for domestic as well as imported gas
  2. India is not only country launching trading hub
  3. China plans to launch a natural gas trading hub in Chongqing this year
  4. The world’s biggest natural gas hub is the Henry Hub in the US state of Louisiana
  5. Britain has National Balancing Point (NBP) as the main gas hub

Back2Basics

Petroleum and Natural Gas Regulatory Board (PNGRB)

  1. The Petroleum and Natural Gas Regulatory Board Act, 2005 establishes the Petroleum and Natural Gas Regulatory Board (PNGRB) to regulate downstream activities in the petroleum and natural gas sector
  2. The PNGRB shall regulate the laying and expanding of (a) transmission pipelines for gas and petroleum and (b) city/ local gas distribution networks
  3. Entities will have to register with the PNGRB to market petroleum products and natural gas, operate LNG terminals and establish storage facilities beyond specified capacity
  4. PNGRB will monitor PNG prices and can take corrective measures to prevent restrictive trade practice by the entities
  5. The PNGRB will have the same powers as a civil court to settle disputes. The Appellate Tribunal under the Electricity Act will serve as the Appellate Tribunal for this Act

India to ally with China on ‘Asian premium’

Note4students

Mains Paper 2: IR | Bilateral, regional & global groupings & agreements involving India &/or affecting India’s interests

From UPSC perspective, the following things are important:

Prelims level: Asian premium, OPEC, International Energy Forum

Mains level: India’s dependence on oil imports and various issues related to it


News

Against Asian premium

  1. India would coordinate with China and other Asian countries to raise voice against the “Asian premium” being charged by the Organisation of the Petroleum Exporting Countries (OPEC)
  2. India with China’s help will chalk out the strategy that would result in getting a better price from OPEC countries
  3. India had also raised the issue on the sidelines of International Energy Forum

Back2Basics

Asian premium

  1. Asia is far more dependent on oil imports from the Middle East (ME) than any other major importing region in the world
  2. Because of this dependence, it is widely believed that Asian customers have been paying a premium for the Middle East crude oil relative to those in the US and EU
  3. A number of studies have consistently identified higher prices for exports to Asia relative to US and EU prices
  4. This is called as “Asian premium”

Organisation of the Petroleum Exporting Countries (OPEC)

  1. OPEC  is an intergovernmental organization of 14 nations
  2. The 14 countries accounted for an estimated 44 percent of global oil production and 73 percent of the world’s “proven” oil reserves
  3. OPEC’s stated mission is “to coordinate and unify the petroleum policies of its member countries and ensure the stabilization of oil markets, in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry
  4. The OPEC Conference is the supreme authority of the organization and consists of delegations normally headed by the oil ministers of member countries
  5. The Conference ordinarily meets at the Vienna headquarters, at least twice a year and in additional extraordinary sessions when necessary

Govt nod for natural gas exploration in areas allotted to Coal India

Note4students

Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Cabinet committee on economic affairs (CCEA), coal bed methane (CBM)

Mains level: India’s energy security concerns and measures taken to overcome them


News

Exploring natural gas

  1. The cabinet committee on economic affairs (CCEA) has approved exploration and production of natural gas from areas allotted to state-run Coal India Ltd
  2. This will help expand India’s coal bed methane (CBM) sector

Push for a gas-based economy

  1. India has been pushing for a gas-based economy
  2. As the world’s fourth-largest liquefied natural gas (LNG) importer, it has been trying to leverage the glut in global LNG supplies to renegotiate its contracts
  3. The decision will help India’s natural gas production and reduce the demand-supply gap in the country

India likely to push for dropping ‘Asian premium’ on oil prices

Note4students

Mains Paper 2: IR | Effect of policies & politics of developed & developing countries on India’s interests, Indian diaspora.

From UPSC perspective, the following things are important:

Prelims level: Asian premiumInternational Energy Forum, Oil Producing and Exporting Countries (OPEC)

Mains level: India’s high dependence on oil imports and measures to develop alternative power sources


News

Ending discriminatory premium on oil

  1. India is likely to lobby heavily for an end to the discriminatory “Asian premium” on oil prices and a “responsible” price mechanism
  2. The 16th International Energy Forum Ministerial Meeting will be held in New Delhi, India from 10-12 April 2018

IEF conference

  1. The IEF represents 90% of world consumption and production of oil and gas
  2. Key Oil Producing and Exporting Countries (OPEC) including Saudi Arabia and Iran’s petroleum ministers will attend the conference

What is Asian premium?

  1. IEF countries distinguished consumers in Asia from the U.S. and European countries in deciding oil prices
  2. The demands to abolish it have met with little success

Focus on renewable energy

  1. The thrust of the IEF conference will be on moving away from fossil fuels
  2. The outcomes would revolve around the whole issue of transition: of moving to electric vehicles, or renewables or decarbonization

Back2Basics

International Energy Forum

  1. IEF is the world’s largest recurring gathering of energy ministers
  2. It is unique in that participants not only include IEA and OPEC countries, but also key international actors such as Brazil, China, India, Mexico, Russia, and South Africa
  3. The IEF is promoted by a permanent Secretariat based in the Diplomatic Quarter of Riyadh, Saudi Arabia
  4. The 16th IEF International Energy Forum Ministerial will take place on 10-12 April in New Delhi under the theme “The Future of Global Energy Security: Transition, Technology, Trade and Investment”

[op-ed snap] The oil risk

Image Source

Note4students

Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: OPEC

Mains level: The newscard discusses the rising crude oil prices and its effects on India.


News

What is the issue?

  1. Crude oil price is about at about $70 a barrel, marking a four-year high and a price increase of close to 6% since the start of the year
  2. The rise in international prices has been particularly sharp given that oil had been selling at below $45 in June
  3. This is an increase of about 55% in a matter of just months

Reason behind this up and down in prices

  1. Oil price dynamics have often been explained by changes in the supply outlook influenced by the decisions of major oil producers
  2. But the recent spurt in oil prices, however, seems to be more the result of a weakening of the U.S. dollar than anything else

Effect of high prices on OPEC countries

  1. Oil trading at $70 should offer some respite to traditional oil producers like the OPEC members, which have suffered the onslaught of U.S. shale producers

Effect of oil prices on India

  1. Consumers in India are already beginning to feel the pinch as petrol and diesel prices have hit multi-year highs
  2. The retail selling price of both petrol and diesel in Delhi, for instance, has risen by close to Rs. 3 a litre since the beginning of 2018

What should be done from the government side?

  1. As rising oil prices put pressure on domestic consumers, the government will have to desist from resorting to subsidies to ease the pain
  2. It should work towards rationalising taxes on petrol and diesel to bring down retail prices
  3. This will help consumers without imposing an undue burden on the oil marketing companies

Effect of oil prices on India’s fiscal

  1. With the fiscal windfall from low oil prices likely to end for now, the government should think for the long term
  2. And make crucial tweaks to its hydrocarbon exploration and licensing policy to expedite oil discovery and production
  3. Simultaneously, it must take a leaf from China’s book and actively support Indian energy firms’ bids for overseas oilfields
  4. Self-reliance is ultimately the best hedge

Petroleum ministry to seek Cabinet approval for domestic gas trading hub

Image Source

Note4students

Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

From the UPSC perspective following things are important:

Prelims level: Government mandated formula for determining natural gas prices in the country.

Mains level: Energy related topics are specially mentioned in the mains syllabus.


News

Seeking approval

  1. Petroleum ministry is seeking approval from the Union Cabinet’s for a domestic gas trading hub
  2. It help India adopt a better mechanism for price discovery of both domestic as well as imported gas

Other plans of the ministry

  1. Ministry is in the process of creating an internal think-tank to assist in priority areas like
    (1) foreign investment
    (2) moving towards gas-based economy
    (3) financing models
    (4) using technology and curbing hydrocarbon imports

How is natural gas prices determined, currently?

  1. Currently, the price of natural gas in the country is determined through a government-mandated formula that links the local price to rates prevailing in gas-surplus nations

Future plans of the government

  1. Currently, India imports almost 60 per cent of its petroleum requirements
  2. India also plans to double its network of pipelines to transport natural gas to 30,000 km within the next three-four years which will help in shifting to a gas-based economy, reduce greenhouse emissions and cut oil import

[pib] India’s flagship biennial international oil and gas conference: PETROTECH

  1. Petrotech is Asia’s largest oil and gas event. The theme for this event is “Hydrocarbons to fuel the future – Choices and Challenges”
  2. Petrotech will also include a BRICS Roundtable of Energy Ministers and a Roundtable discussion involving select CELAC countries of Latin America
  3. India will also host the International Energy Forum – International Gas Union (IEF-IGU) Ministerial Forum on December 6
  4. What’s CELAC? The Community of Latin American and Caribbean States is a regional bloc of Latin American and Caribbean states thought out on February 23, 2010

Cairn cannot export Barmer crude: Delhi HC

  1. Delhi HC rejects plea of Cairn India Ltd to export crude oil from its Barmer oil field in Rajasthan
  2. The government had opposed Cairn’s plea on the ground that export of the domestic crude oil cannot be allowed as it would be detrimental to India’s energy security
  3. Nearly 85 per cent of required crude in India was imported
  4. The Delhi HC said that domestic crude cannot be exported till India attained “self sufficiency”

Shah panel indicts RIL in KG basin case

  1. Justice A.P. Shah committee: Probed a dispute between state-run Oil and Natural Gas Corp. Ltd (ONGC) and Reliance Industries Ltd (RIL)
  2. Dispute: Pertained to the flow of gas between the adjacent fields of ONGC and RIL in the Krishna-Godavari (KG) basin
  3. Finding: The unfair enrichment in RIL’s KG D6 field came because RIL retained the gains of the gas which flowed into its field from adjacent fields of ONGC
  4. The report accused both ONGC and RIL of not bringing to the notice of the regulator, the Director General of Hydrocarbons, information they had about how their fields were connected
  5. ONGC took action six years after it came to know about gas from its field flowing into RIL’s field

SC concerned over adulteration of petro products

  1. SC: A criminal-politician mafia nexus run petrol pumps and subsidised kerosene distribution in rural and urban parts of the country have led to rampant adulteration of petroleum products
  2. It is rampant and unfortunate that very powerful people like politicians have petrol pumps
  3. They can tamper with the machine & are the ones who will resist the change
  4. It asked Govt to detail measures taken to stop fuel adulteration and siphoning of subsidised kerosene meant for the poor
  5. It even suggested the possibility of installing equipment which can detect fuel adulteration

Reply to CAG report

  1. Ministry of Petroleum & Natural Gas has taken up the issue of significant implication of inclusion of condensate for determination of ONGC’s share of under-recoveries with the Govt
  2. ONGC: Had appealed to Govt that in future only crude oil quantity be considered for determination of ONGC’s share of under-recoveries and quantity of gas condensate may not be included
  3. Why not to include? The gas-condensate is neither crude oil nor is it sold

ONGC overstated crude oil output: CAG report

  1. CAG: ONGC had to bear a larger share of subsidy due to overstatement of reported crude oil production by inclusion of condensate and off-gas
  2. The measurement of crude oil production should not include condensates and off-gas (a dissolved gas in crude oil separated during the stabilisation process of crude oil)
  3. Under-recovery: Upstream national oil companies such as ONGC and OIL shared the under-recoveries of oil marketing companies that arose from their having to sell petroleum products at subsidised rates
  4. Subsidy sharing system(since 2012): An upstream company’s subsidy burden is to be calculated on the basis of its total crude oil production

India’s biggest oil refinery to come up

  1. India’s biggest oil refinery that state-run IOC, BPCL, HPCL and EIL plan to set up on the west coast will cost US$ 30 billion
  2. The refinery have 60 million tonnes capacity with 3 crude units of 20 million tonnes each for products such as petrol, diesel
  3. IOC has been looking at west coast for a refinery as catering to customers in West and South was difficult with its refineries mostly in the North
  4. HPCL and BPCL have also been looking at a bigger refinery because of constraints they face at their Mumbai units
  5. Reliance Industries has the biggest refinery in India till now with the 33 million tonnes capacity at Jamnagar in Gujarat

Creating strategic reserves of fuel

  1. Strategic reserves of fuel being created for the first time in India by the NDA govt
  2. India used to have 5 to 6 days of storage, mostly stocks in transit
  3. Global: China has facilities for storage of crude oil for 20 days and the US has 50 to 60 days of storage

Low inflation shows oil price benefit passed on: Pradhan

  1. What? Oil Minister Dharmendra Pradhan has strongly dismissed the perception that the Govt has failed to pass on the benefits of lower oil prices to Indian consumers
  2. How? He cited reasonable levels of inflation over the past two years as a proof of transferring the benefits of lower oil pries
  3. If Govt had not passed on the crude oil price benefit to the consumer, the transportation sector would not have seen so much rationality in prices
  4. Avoiding shocks: He also defended the high taxation on fuels as a tool to protect people from a price shock when oil prices start to climb up again
  5. There is no developed country that has transferred the benefit of sliding oil prices to the consumers in any real way
  6. Use of savings: Centre has been using the fuel tax receipts to finance critical development programs such as affordable housing, cooking gas connections for the poor and so on

Analysts grow more bullish on oil, OPEC poses no threat to rebalancing

  1. What? Analysts are growing increasingly confident that a near-two-year rout in oil has ended
  2. They have raised their price forecasts for a second month running
  3. Reason: Healthier demand and a drop in U.S. shale output to balance the market by 2017
  4. Also, the inability of OPEC and non-OPEC producers to agree to limit oil output is not expected to slow the rebalancing of global demand and supply

LPG subsidy goes for high income consumers

  1. Context: Rationalisation of LPG subsidy
  2. Income limit: Oil and Gas Ministry is excluding people earning more than Rs.10 lakh a year from LPG subsidies
  3. Income will be as computed under Income Tax Act, 1961
  4. Change of stance: Last week, ministry had denied the use of Income Tax data for income identification

Govt might cut natural gas price by up to 17%

  1. Context: The petroleum ministry might cut domestic natural gas prices by as much as 17%
  2. The Petroleum Planning and Analysis Cell is likely to make a notification of the new price
  3. Why? To align rates with the decline in global prices
  4. Impact: The new price would dent the earnings of state-run explorers and the government’s earnings from the royalty on production

Oil prices take toll on remittances

  1. Context: According to RBI data, Indians remitted $15.8 billion during 3rd quarter of 2016, the lowest in 18 quarters
  2. Reason: This reflects the flip side of the sharp fall in global crude oil prices
  3. If prices remain low for an extended period, the fall in remittances could prove to be more than a one-off
  4. Remittance is India’s most stable source of dollar inflows & a big positive for the country

Future oil security at risk: IEA

  1. What? We may face an oil shock in future. according to the International Energy Agency
  2. Why? Because the price bust has hammered investment in future supply
  3. Oil firms have cancelled more than $100 billion investments, laid off tens of thousands of workers, slashed dividends and sold assets
  4. If investment doesn’t resume in 2017-18, we can see a spike in oil prices as oil supply can’t meet demand

Centre changes tack on LPG subsidy campaign

  1. Context: In Dec 2015, Centre had notified Rs. 10 lakh as the cut-off annual income for LPG subsidy, but urged people earning more to give it up voluntarily
  2. News: The govt has decided to charge the full unsubsidised price of cooking gas to all customers who earn more than Rs.10 lakh a year
  3. It was done with the support of Income Tax department which identified around 3 lakh people with an income of more than Rs. 10 lakh
  4. Reason: The voluntary campaign “Give it up” did not yield the desired results
  5. Statistics: Around 85.24 lakh people have given up their LPG subsidy voluntarily

Opec sees lower 2016 demand for its oil, pointing to higher surplus

  1. Context: Falling crude oil prices in global market
  2. News: The Organization of the Petroleum Exporting Countries predicted global demand for its crude oil will be less in 2016
  3. Reason: The supply from producers outside OPEC is more resilient to low prices and they have started cutting production
  4. OPEC sees considerable uncertainty for 2016 in Europe

New regime in oil and gas exploration

  1. Context: Govt effected major policy changes in oil & gas exploration
  2. Revenue sharing: Prospective replacement of profit-sharing in hydrocarbon exploration with a revenue-sharing formula
  3. Benefit: It may help prevent future disputes over pricing and cost recovery such as one with Reliance Industries Ltd (RIL)
  4. License Policy: A transparent single license and policy framework for oil, gas and coal-bed methane (CBM) exploration
  5. At present there is a different policy for each form of hydrocarbons
  6. Pricing: Freeing gas pricing from the new blocks and existing discoveries which are yet to commence production

First high-octane fuel unit to come up at Mathura

  1. News: Petroleum Minister laid the foundation stone for India’s first Octomax unit at the Mathura refinery for the production of high-octane gasoline.
  2. Importance: Unit will be the first-of-its-kind in India addressing the emerging scenario in petroleum refining
  3. About Octomax: Novel technology developed in-house by R&D Centre of Indian Oil
  4. Involves: conversion of cracked C4 streams to high-octane gasoline blending stock for production of Euro-IV/V equivalent gasoline
  5. Way forward: Mathura refinery will play major role in meeting govt’s target of introducing BS-VI standards in petrol and diesel by 2020

North East in Hydrocarbon Vision 2030

North-east India would be a gateway of South-East Asia in future

  1. Govt planning projects totalling Rs.1.3 trillion in public and private investments in the North-East region
  2. Aims to double oil and gas output in the next 15 years
  3. Has an eye on markets such as Bangladesh, Nepal, Bhutan and Myanmar
  4. A strong network of crude oil and natural gas pipelines would be set up as part of the plan
  5. Present production is 223 million tonnes of petroleum products and 33 billion standard cubic metres of natural gas a year

India to buy more crude oil from Nigeria

  1. India is set to import more crude oil from Nigeria, already one of the biggest contributors to the country’s oil imports.
  2. Nigeria has now agreed to increase the term contract from 1.7 million tonnes(MT) per annum to 3 MT in 2016.
  3. The benefit of a term-contract is that it ensures quantity as well as a stable price.
  4. Nigeria is the 3rd-largest contributor to India’s oil imports, behind Saudi Arabia and Iraq.
  5. Sudan has offered more oil blocks for exploration and asked for Indian companies’ expertise to raise production from existing fields.

Saudi Arabia’s oil premium may force India to tap Africa

  1. India is looking at Africa to spruce up its oil and gas imports as it seeks to diversify its energy basket.
  2. Recently, Saudi Arabia has decided to charge a premium for the oil it sells to Asian customers.
  3. It would be charging Asian customers 60 cents a barrel more for crude oil during February.
  4. The upcoming 4th India-Africa Hydrocarbon Summit will help in moving this forward.
  5. Africa already contributes around 15% of India’s oil needs and Nigeria is one of the top providers of oil to India.

Union Cabinet gives nod for development of Underground Coal Gasification

Cabinet has approved a policy framework for development of Underground Coal Gasification (UCG) in unexplored coal and lignite bearing areas in country.

  1. The UCG policy framework has been framed in line with the existing policy for Coal Bed Methane (CBM) development on revenue sharing basis.
  2. Development of UCG has been envisaged to provide for energy security and will be adopted for offering the blocks through competitive bidding.
  3. Central Mine Planning and Design Institute Ltd (CMPDIL) will be the nodal agency for all business related proposals and regulations.
PIB

[op-ed snap] Welcome step on oilfields

  1. The government has taken a refreshing and progressive approach with respect to the unutilised natural resources locked away in the 69 small and marginal oilfields lying with the state-owned exploration agencies.
  2. Approved the auction of these oilfields to private, and even foreign, companies, and initiated a new approach in the licensing and proceeds-sharing mechanisms.
  3. The first step was to move from a profit-sharing mechanism to a revenue-sharing mechanism.The revenue-sharing approach is simpler, and is likely to earn the government more money and reduces delays and disputes.
  4. Under the new plan, companies will be allowed to sell crude oil or natural gas at market prices, without any interference from the government.
  5. The revenue and royalty-sharing mechanism will be pegged at this market rate.
  6. The other welcome step has to do with the licensing method.
  7. Companies will receive a unified licence for all hydrocarbons, including conventional ones such as oil and gas, and non-conventional ones such as shale oil and shale gas.
  8. This shows  government’s move towards enhancing the ease of doing business.

Let’s Dig out process of formation of crude oil? Shall we?



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