Petroleum definition changed for uniformity in operations: Government

Further easing the oil and gas exploration norms in India, the government has now redefined 'petroleum', thereby giving operators the option to explore all hydrocarbons -- including traditional oil and gas, shale, coal bed methane and hydrates -- in the same field.  

In a notification dated July 24 amending the Petroleum and Natural Gas Rules of 1959, the ministry of petroleum and natural gas said that petroleum means "naturally occurring hydrocarbon in the in the form of natural gas or in a liquid, viscous or solid form, or a mixture thereof." However, it will not include coal, lignite and helium occurring in association with petroleum or coal or shale. The move is likely to benefit not just state-run companies like Oil and Natural Gas Corporation (ONGC) and Oil India, but also private sector majors like Vedanta Cairn. 

"The amendment would open up exploration of all hydrocarbons in existing fields which is in line with the new HELP. This should help in enhancing domestic exploration and production of hydrocarbons, thereby increasing India’s energy security and reducing our dependency on imports," said Prashant Modi, Managing Director and chief executive officer of Great Eastern Energy Corporation.

This comes after the new Hydrocarbon Exploration and Licensing Policy (HELP) cleared by the Union Cabinet in March 2016, which allowed uniform license for exploration and production of all forms of hydrocarbon.

The move will open up more revenue opportunities for many of the 117 companies that were operating in India after the conclusion of the ninth round of NELP.

After the nine rounds of NELP, at least 11 public sector undertakings, 58 private and 48 foreign companies marked their presence in India.  Even though India is not known for its shale reserves, it is believed to have at least 91.8 trillion cubic feet of CBM reserves. Already the government has conducted discovered small field (DSF I) and Open Acreage Licensing Policy (OALP-I) in which the blocks were allotted under a uniform licensing policy. However, both the rounds did not attract the interest of foreign players to India.

Early this month, the Cabinet rolled out sops for companies like ONGC and Oil India by relaxing production sharing contracts (PSC) of Pre-Nelp and New Exploration Licensing Policy (NELP) blocks. This includes giving relief to companies like ONGC and Oil India on sharing of royalty and cess in pre-Nelp exploration blocks. 

This is after a series of measures to boost exploration, including the government relaxing rules for state-owned Coal India Ltd for extraction of natural gas lying below coal seams in its blocks in a bid to quickly boost production. Earlier, Coal India Ltd had to apply to oil ministry for a licence to extract coal-bed methane (CBM) from its coal blocks. Now, the world's largest coal producer does not need such permission.