Centre makes way for new hydrocarbon policy

11 Mar 2016 | By Vaneet Randhawa
New policy to 'HELP' the hydrocarbon sector

The Union Cabinet adopted a new Hydrocarbon Exploration and Licensing Policy (HELP) aimed at promoting investments in the oil and gas sector.

The government has approved marketing and pricing autonomy for the natural gas and crude oil produced by a developer.

The Cabinet also allowed a pricing formula for natural gas generated from deep sea and difficult-to-explore geological regions.

In context: New policy to 'HELP' the hydrocarbon sector

17 Nov 2015India to get a new hydrocarbon policy soon: Pradhan

Minister of State for Petroleum and Natural Gas Dharmendra Pradhan said that his Ministry intended to have a new hydrocarbon policy replacing the NELP ready by the end of the present financial year.

He said that natural gas produced from any hydrocarbon blocks will be given pricing and marketing freedom.

He also laid stress on increasing India's bio-energy output.

Old PolicyNeed for a new hydrocarbon policy

Despite 9 rounds of NELP (New Exploration Licensing Policy) which had been in India since 1999, 75% of India's natural gas and oil resources were left largely unexplored.

The profit-sharing method didn't offer much incentive and over the years, the domestic oil and gas output declined.

Moreover, the extension process of fields was lengthy and mired by legal entrapments.

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11 Mar 2016Centre makes way for new hydrocarbon policy

$36.6 billion worth treasure to be unlocked through HELP

The new policy measures are expected to help explorers by opening India's hydrocarbon treasure worth $36.6 billion (Rs 2.33 lakh crores).
The big changes made by the new policy

11 Mar 2016The big changes made by the new policy

The government in a revolutionary step replaced the current profit-sharing system in hydrocarbon exploration with a revenue-sharing formula.

This move to share revenue is aimed towards minimizing government intervention.

Further, the different policies for different form of hydrocarbons were done away with, paving the way for a transparent single licence and policy structure for oil, gas and coal-bed methane exploration.

11 Mar 2016Extension to small and medium sized oil fields

The Cabinet also lengthened the licenses of 28 small- and medium-sized oil and gas fields such as Panna-Mukta and Tapti of the BG Group that were due for renewal.

However, the easier extension means the government's profit share be increased by 10%.

Further, the companies will not get concessions on royalty and cess, which they will pay at prevailing higher rates.