Moily allows RIL, Cairn to further explore in producing fields
04 January 2013
The ministry of petroleum and natural gas has cleared the proposals of Reliance Industries Ltd and Cairn India Ltd to expand exploration in their current producing fields.
The ministry has, however, linked cost recovery in either case to commercial production.
The decision comes three months after M Veerappa Moily took over as oil minister from his predecessor Jaipal Reddy in October last year.
The petroleum ministry, after sitting on the proposals for over a year, is reported to have written to the Directorate General of Hydrocarbons (DGH), earlier this week, underlining its decision to permit exploration in oil and gas fields that are already in operation.
Companies, however, cannot claim cost recovery without commercialisation of the exploration and subsequent discovery of oil or gas.
"Cost recovery of such exploration being subject to establishment of commerciality of the new discovery..., mitigating any risk to the government revenue from existing discoveries," the ministry wrote to DGH. "Cost recovery will be governed by current provisions of PSC on establishment of commerciality."