Government Goes For Ease Of Doing Business For Oil And Gas Exploration Processes


The Directorate General of Hydrocarbons (DGH) has released detailed guidelines for simplifying procedures and process for oil and gas exploration and production. This would require self-certification for multiple compliances, such as a discovery notification and deemed consent for investment in fields in a stipulated time. Government will henceforth accept self-certification for confirmation discovery and tests.

The Directorate General of Hydrocarbons (DGH) has issued notification, under Production Sharing Contract (PSC) for pre NELP and NELP oil and gas blocks.

India’s total oil and gas production comes from either areas given to state-owned ONGC and OIL on nomination basis or awarded to companies such as Reliance Industries and Cairn in bid rounds since 1990s.

“Ease of doing businesses is one of the focus areas of the government in exploration and production (E&P) sector, with the objective to Increase investment and production,” the DGH said in the order.

“Simplification of procedures and processes make the system transparent and faster which facilitates investments in the sector.”

The areas or blocks awarded under New Exploration Licensing Policy (NELP) since 1999 such as RIL’s KG-D6 or fields given away in pre-NELP bid rounds like Cairn’s Rajasthan oil block will benefit from the easing of rules
One of the critical aspects of the PSCs signed under pre-NELP and NELP, which also tends to be one of the most contentious, relates to cost recovery: the extent of cost recoverable by the operator from revenue generated in the oil and gas field.

Another important area of dispute is the investment multiple (IM) that determines profit sharing between the government and the contractor.

The DGH said a review of processes for various approvals and submission of documents for the same under PSCs for NELP/pre-NELP was undertaken.

Following this, the processes have been divided into three categories – process where documents shall be accepted on self-certification basis and no approval is required; processes where approval will be deemed on expiry of 30 days of submission of documents under self-certification; and processes where approval shall be required.

The 22 processes where documents will be accepted on self-certification basis and no approval is required include information of discovery, potential commercial interest, bank guarantee, notification of discovery confirmation test, inventory report, submission of data, environment impact assessment report, contingency plan, appointment of auditor, notice for entering next phase or relinquishment and commercial discovery.

Work programme and budget, appraisal programme or its revisions and field development plan or its revisions are the three processes where approval will be deemed after 30-days.