Hydrocarbon Exploration and Licensing Policy (HELP)

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister  Shri Narendra Modi, has approveda proposal to grant marketing including pricing  freedom for the gas produced from High Pressure High Temperature, Deepwater and  Ultra Deepwater areas. The marketing freedom so granted would be capped by a ceiling price arrived at on the basis of landed price of alternative fuels.

The policy guidelines would be applicable to future discoveries as well as  existing discoveries which are yet to commence commercial production as on  1.1.2016. However, in case of existing discoveries which are yet to commence  commercial production as on 1.1.2016, if there is pending arbitration or  litigation filed by the contractors directly pertaining to gas pricing covering  such fields, this policy guideline shall be made applicable only on the  conclusion/ withdrawal of such litigation/ arbitration and the attendant legal  proceedings. All gas fields currently under production will continue to be governed by the pricing regime which is currently applicable to them.

The ceiling price in US $ per mmbtu (GCV) shall be the, lowest of the (i)  Fuel oil import landed price (ii) Weighted average import landed price of substitute fuels (0.3 x price of coal + 0.4 x price of fuel oil + 0.3 x price  of naphtha) and (iii) LNG import landed price, whichever is lower.

The landed price-based ceiling will be calculated once in six months and  applied prospectively for the next six months. The price data used for calculation of ceiling price in US $ per mmbtu (GCV) shall be the trailing four quarters data with one quarter lag. Director General of Petroleum Planning and  Analysis Cell (DG, PPAC) under the Ministry of Petroleum and Natural Gas will  notify the periodic revision of gas price ceiling under these guidelines.

Production Enhancement:

The decision is expected to improve the viability of some of the  discoveries already made in such areas and also would lead to monetization of  future discoveries as well. The reserves which are expected to get monetized  are of the order of 6.75 tcf or 190 BCM or around 35 mmscmd considering a  production profile of 15 years. The associated reserves are valued at 28.35  Billion USD (1,80,000 Crore) The country’s present gas production is around 90  mmscmd. Besides, these there are around 10 discoveries which have been notified  and whose potential is yet to be established.

Employment Generation:

The decision is expected to result into monetization of the 28 discoveries  mentioned above which can result into substantial investment by the  contractors.

There would be substantial employment generated during the development  phase of these discoveries and a part of it would continue during the  production.

ONGC has estimated that in the development of discoveries in the block  KG-DWN-98/2, there would be deployment of 3850 direct skilled labours. Besides,  these there would be around 20,000 persons required during the construction  phase. GSPC presently in the block KG-OSN-2001/3 is deploying around 690 personnel  in the block.

Transparency and Minimum Government and Maximum Governance:

Government will not interfere in the price fixation for every block covered  under the policy.

Provision of ceiling to balance the requirements of consuming sectors.

Incentivize upstream investment and not getting into unnecessary details.