The government will be soon introducing premium prices on new explorations in difficult sectors. With this, the government wants to encourage hydrocarbon explorations. The upcoming announcement will let major explorers like Reliance Industries Limited and Oil and Natural Gas Corporation (ONGC) Limited to get additional premium charges more than the price formula that government agreed to, in October 2014. Discoveries that will be made in high temperature and high-pressure areas, deep-water and ultra deep-water areas will receive a premium on the gas price.
Union Minister for Petroleum, Dharmendra Pradhan, assured that the pricing issue has been resolved. With premium pricing, the government will try to woo investors in the hydrocarbon field. Around 70% of basins in the hydrocarbon sector in India are under-explored.
Last year, the NDA government introduced a new formula for gas pricing, which was accepted by the Cabinet Committee on Economic Affairs (CCEA). The price from April to September will be $5.18 per million British thermal unit (mmBtu). The price is based on net calorific value, which is heat received from one volume unit of gas.
The New Exploration Licensing Policy (NELP) was accepted in 1997 in India and was implemented from January 1999 in an attempt to enhance hydrocarbon exploration. With this policy, explorers will obtain rights to explore hydrocarbon blocks with bidding. The government has already done it in 9 rounds for 360 blocks and received an investment of nearly $21.3 billion. Since 1994, the Central government has received $15.41 billion from hydrocarbon explorers. Besides, the State governments has received $1.93 billion.
Consumption in India
India ranks fourth among the biggest energy consumers in the world. To fulfill its energy demands, it imports 80% of its crude oil and 25% of its natural gas needs. In the last fiscal year, petroleum product consumption in India increased by 3.14% and reached 163.17 million tons. India ranks 15th in gas consumption with 51 billion cubic meters (bcm) and fourth in gas imports of LNG with 18 bcm.
Discoveries of Reliance Industries
In June, Ministry of Oil announced that Reliance Industries will generate 23 million standard cubic meters per day of additional gas from its five discoveries in the KG-D6 block. The company aims to achieve this by the next fiscal year.
Reliance Industries produces 10 mmscmd from four satellite fields of D-2, D-6, D-19 and D-22, which are located in the eastern offshore Krishna-Godavari basin block KG-D6. They hold 617 million cubic feet of reserves. Reliance Industries and its partner BP plc are investing $1.529 billion for their development. The fifth field, D-34 produces 13 mmscmd alone.
135 hydrocarbon discoveries that consist of 46 crude oil and 89 natural gas discoveries were achieved through NELP in 46 blocks. Out of these, Reliance Industries has the maximum of 51 discoveries. These are 12 oil discoveries and 39 gas discoveries. The KG-D6 block of the company has 19 oil and gas discoveries.Its D-34 or R-Series discovery in the same block has 2.2 trillion cubic feet of reserves. The company invested around $3.18 billion on it.
IndianBureaucracy.com wishes the very best.