Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, and Railways etc.
From UPSC perspective, the following things are important:
Prelims level: Particulars of the new policy
Mains level: Hydrocarbon exploration in India
- The Union Cabinet has approved the policy to permit exploration and exploitation of unconventional hydrocarbons such as Shale oil/gas, Coal Bed Methane (CBM) etc.
- It will be carried out under the existing Production Sharing Contracts (PSCs), CBM contracts and Nomination fields to encourage the existing Contractors in the licensed/leased area to unlock the potential of unconventional hydrocarbons in the existing acreages.
Provisions of the new policy
- The fiscal and contractual terms of the policy provide for ring-fencing of Petroleum Operations and cost recovery of new hydrocarbon discoveries in PSC block.
- Additional 10% rate of Profit Petroleum/ Production Level Payment (PLP) in case of CBM contract, over and above the existing rate of Profit Petroleum/PLP is to be shared with Government on new discoveries.
- For nomination blocks, NOCs will be allowed to explore and exploit unconventional hydrocarbons under the existing fiscal and contractual terms of exploration/lease license.
- This policy will enable the realization of prospective hydrocarbon reserves in the existing Contract Areas which otherwise would remain unexplored and unexploited.
- With this policy dispensation, new investment in Exploration and Production (E&P) activities and chances of finding new hydrocarbon discoveries and resultant increased domestic production thereof is expected.
- Exploration and exploitation of additional hydrocarbon resources is expected to spur new investment, impetus to economic activities, additional employment generation and thus benefitting various sections of society.
- This will lead to induction of new, innovative and cutting-edge technology and forging new technological collaboration to exploit unconventional hydrocarbons.
Uniform Licensing Regime
- As per existing contractual regime of PSCs, existing Contractors are not allowed to explore and exploit CBM or other unconventional hydrocarbons in already allotted licensed/leased area.
- Similarly, CBM Contractors are not allowed to exploit any other hydrocarbon except CBM.
- With the approval of this policy, there will be complete shift from ‘One hydrocarbon Resource Type’ to ‘Uniform Licensing Policy’ which is presently applicable in Hydrocarbon Exploration & Licensing Policy (HELP) and Discovered Small Field (DSF) Policy.
Shale gas basins in India
- Presence of Shale oil/gas has a strong possibility in basins such as Cambay, Krishna- Godavari (KG), and Cauvery etc. where mature organic rich Shale exists.
- An area of 72,027 sq. km. held under PSCs of Pre- New Exploration Licensing Policy (NELP)/NELP regime and 5269 sq. km area under CBM contracts has been opened up for simultaneous exploration and exploitation of conventional or unconventional hydrocarbons.