Government to review oil and gas production sharing contracts

03 Jul 2012

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The government has invited views from both stakeholders and the public on the production sharing contracts for hydrocarbon exploration awarded under the New Exploration Licensing Policy (NELP).

The committee headed by Dr Rangarajan, chairman of the Prime Minister's Economic Advisory Council, was set up to look into future production sharing contracts in hydrocarbon exploration.

Interested persons or organisations should send their views to the committee's secretary (joint secretary, ministry of petroleum, New Delhi) not later than 31 July 2012, the release said.

The prime minister set up the committee to review production sharing contracts in view of the recent spat between Reliance Industries and the petroleum ministry over the issue.

The committee has been asked to submit its recommendations by 31 August 2012.

Under the present production sharing contract, the onus of achieving a certain level of production is on the explorer and this has been contested by Reliance Industries Ltd whose gas production from the KG-D6 gas field has lagged target.

According to Reliance Industries, there is no "obligation" in the contract to achieve certain level of production and the government cannot levy penalty for not meeting indicative output levels.

Petroleum ministry, however, contended that RIL did not drill wells to the committed level, which led to the fall in output. The ministry had, last month, disallowed $1.005 billion of its cost already incurred.

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