New Delhi, March 23 : A Union Cabinet panel on Wednesday approved a policy for extending the licences of oil and gas fields awarded before the 1999 New Exploration Licensing Policy (NELP) regime, on payment of an additional 10 per cent profit share.
The Cabinet Committee on Economic Affairs approved the policy for grant of extension to the Production Sharing Contracts (PSC) signed by the government awarding pre-NELP exploration blocks, to enable and facilitate investment to extract the remaining reserves," a Petroleum Ministry release said here.
The policy, under which contractors will have to pay an additional 10 per cent profit during the extended period of the contract, will enable companies to extract not only the remaining reserves but also plan to extract additional reserves by implementing new technologies, the statement said.
"In certain fields, additional recovery of hydrocarbons can be obtained through Enhanced Oil Recovery/Improved Oil Recovery (EOR/IOR) Projects and as such the production would extend beyond the current duration of PSC," it said.
During the current year, the production from these oil and gas blocks, allotted in pre-NELP regime, is around 55 million barrels of oil and 965 million standard cubic metres of natural gas.
"The recoverable reserve from these blocks is estimated to be more than 426 million barrel of oil equivalent. During the extension period, contractors are expected to make an additional investment of more than $5,430 million," it said.
"Among others, it includes oil and gas blocks in the state of Rajasthan that account for about half of the country's onland production of crude oil," it added.
The Barmer block in Rajastan has private firm Cairn India and state-run Oil and Natural Gas Corporation (ONGC) as its partners, while the companies had been requesting an extension of their PSCs beyond 2020.
"The government's share of Profit Petroleum during the extended period of contract would be 10 per cent higher for these fields, thus bringing additional revenues to the government," the statement said.
The extension of these contracts is expected to bring extra investments in the fields and would generate both direct and indirect employment, it added.
