Govt allows cos to explore for oil, gas beyond block boundaries

In a bid to make it easier for explorers to find and produce more oil and gas, the Government has allowed companies to go beyond their allocated block boundaries if a discovery were to extend outside their contracted area.

In a "Policy Framework for Streamlining the Operations, Relaxation of Timelines", the Oil Ministry yesterday delegated powers to head of its upstream regulatory body, DGH to prove excusable delays and excess cost recovery.

It allowed companies to carry out an appraisal of an oil and gas discovery beyond the boundaries of their allocated exploration area on the recommendation of block oversight panel, called the Management Committee.

The firms can take a Petroleum Exploration License (PEL) of area beyond their awarded block boundaries to "ascertain the extent of the commercial discovery" provided "such area is not of strategic importance, or such area has not been awarded to any other company by the government or is not held by any other party or is not on offer by the government" in any bid round, the order said.

The ministry also simplified the process of companies to pay for unfinished committed exploration and drilling work and enter into next phase of production and development quickly.

While presently the companies have to pay the amount equivalent to unfinished work as determined by DGH within 60 days of the expiry of the exploration phase, the ministry has allowed submission of a bank guarantee for any amount that is disputed between them.

On empowering the Director General of Directorate General of Hydrocarbons (DGH), the order said the head of the regulatory body can approve "excusable delays" in exploration phase due to any delays in government approvals and clearances. Earlier, the extra period for excusable delays was given only after approval by the ministry.

DG, DGH can, however, do this only on review and recommendation by a multi-disciplinary committee, it said. "The DGH would properly define excusable delays and prescribe the detailed procedure for allowing excusable delays."