The government is working on a policy to boost investments in the petroleum sector in the Northeast that may provide for viability gap funding provisions to make exploration projects in difficult areas viable, as part of a larger hydrocarbon vision.
"Crude oil and gas production from the resource-rich north eastern states has come down. Many projects are not being taken up due to viability issues. We are talking to the stakeholders on the matter.
The new policy formulation will be announced by 15 December," Additional Secretary in the oil ministry U P Singh said.
He was speaking at the North-East Energy Summit organised by the Confederation of Indian Industries (CII) here. While Singh refused to share the details of the provisions in the new policy, he said the idea is to close the gap in economic viability for projects entailing large investments including exploration and pipeline projects through measures similar to VGF provided by the centre.
"The oil and gas sector in north-east is confronted with several challenges including demand-side issues, availability of infrastructure and advanced technology to arrest the natural decline in production. The government is conscious of these challenges and the ministry is scheduled to hold a consultative meeting with Chief Secretaries of all North-East states to finalize a Hydrocarbon Vision for North East India," he said.
Oilfields in the North-Eastern states currently accounts for 12% of crude oil production of 37.4 MT. The region's annual oil production has come down from 4.84 million tonne (MT) in 2011 to 4.54 MT currently -- thanks to delayed clearances, difficult geology and infrastructure constraints - making it difficult for India to achieve its target of oil import dependence from 77% to 66% by 2022.
Singh said the problem of natural decline in oil and gas fields will be addressed owing to the latest reform initiatives for the sector launched by the oil ministry including Uniform licensing policy, revenue-sharing model of hydrocarbon development and pricing and marketing freedom for operators.