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 Energy demand in India far outstrips consumption, but regulated low
prices for gas from prolific but challenging deepwater fields have
deterred investment in the sector.
Under the reforms, companies will have more freedom to set the price
of gas from new discoveries and existing finds not yet in
production. But they will be subject to a ceiling price set
according to the landed price of alternatives such as fuel oil,
naphtha, coal and liquefied natural gas, Oil Minister Dharmendra
Pradhan told a news conference. The ceiling price would be reviewed
every six months. (http://bit.ly/1SBTo7v)
This will help boost gas output by at least 35 million cubic meters
a day (mmscmd) for 15 years, equivalent to a total of 6.75 trillion
cubic feet over that period, Pradhan said. India's current gas
production is about 90 mmscmd.
The move will benefit companies like Oil and Natural Gas
Corporation, the country's top explorer, and Gujarat State Petroleum
Corp, a government-run firm in the home state of Prime Minister
Narendra Modi. ONGC said last month it wanted higher gas prices
before it starts production from its east coast deepwater block.
Reliance Industries, currently in a legal battle with the government
over gas pricing, will have to either withdraw its case or wait for
it to conclude before it can benefit from the new rules.
An oil ministry official said there would be no immediate output
increase as production from these difficult fields would take at
least three years to come on stream.
India, which imports two-third of its oil needs, will also offer a
common exploration license for different hydrocarbons like oil,
natural gas, shale oil and gas and coal bed methane, in order to
more quickly tap its vast resources.(http://bit.ly/1TNXyuq)
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Pradhan said the new proposal would help reduce government
intervention and could boost foreign investment in Indian oil and
gas when global oil prices recover.
India has also decided to extend the exploration licenses of 28
discovered oil and gas fields, awarded mainly to ONGC and Oil India,
without bidding.
The cabinet granted control of the western offshore Ratna and
R-Series oil and gas fields to ONGC. The fields stopped production
in 1996, when they were awarded to the Essar Group controlled by
India's billionaire Ruia brothers.
"Resource worth 2.61 trillion rupees ($38.92 billion) will be
brought to production as a result of today's decision," Pradhan
said.
(Reporting by Nidhi Verma in NEW DELHI and Promit Mukherjee in
Mumbai; Editing by Mark Trevelyan)
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