Oil and gas explorers cannot violate PSC: Govt

The government said today oil and gas explorers are bound by the production sharing contract (PSC) which gives it the right to approve a gas price formula and decide on utilisation of the fuel.     

Petroleum Secretary RS Pandey said the contractors cannot violate the PSC.     

The PSCs signed for the blocks that have been awarded in seven bid rounds since 1999 provide for government approving a gas sales formula and sale of the fuel according to the gas utilisation policy of the government.     

"The PSC provides for gas sales on arms-length basis, but there is another provision that it has to be approved by the government prior to the sales," Pandey told reporters at the first road show for the NELP VIII.     

 

The official said the participants at the road show have appreciated the transparency and stability in fiscal and other policies as outlined in the NELP.     

"The participants have made it clear that they are all for investing in India's economic conditions and the policy environment is very conducive," Pandey said.     

Asked if the Ambani gas dispute will discourage potential investors, he said it was not a possibility because investors were looking for attractive returns.     

"Why should people be discouraged. People want good returns. We have not got any response from any major player on this," he said. ONGC Chairman and Managing Director RS Sharma said the state-run firm would be an aggressive bidder in the NELP VIII round for which which the bids close on October 12.      

"If you look at the past, ONGC has been a predominant bidder and has bagged 50 per cent on the blocks on offer. We will continue to pursue that strategy," he said.      

"NELP has been an important initiative of the Government to help India achieve energy security in the long run. Although, the global financial crisis and the volatility in crude prices may pose a challenge in attracting newer companies, some of the big oil & gas companies are using it is as an opportunity to expand their operations," Ernst & Young Tax Partner Vijay Iyer said.     

"The small sized blocks offered in NELP VIII will be an opportunity for mid-size Indian companies who may like to enter the upstream sector. The clarification with respect to tax holiday on production of natural gas for NELP VIII will also have a positive impact on the investors," he added.