A technician opens a pressure gas valve inside the Oil and Natural Gas Corp group gathering station on the outskirts of Ahmedabad. India yesterday eased rules on testing gas finds which will unlock 12 discoveries that have been waiting for development for years because of a dispute over testing of their commercial viability.
Reuters/New Delhi
India yesterday eased rules on testing gas finds, which will help Oil and Natural Gas Corp (ONGC) and Reliance Industries (RIL) unlock reserves of about 90bn cubic metres worth Rs1tn ($15.8bn), a government statement said.
The 12 discoveries – six each for the two companies – in five blocks have been waiting for development for years because of a dispute over testing of their commercial viability.
Yesterday’s announcement will help establish a clear policy for the future, the statement said, adding: “The policy will also help in bringing out transparency and uniformity in decision-making as against a case by case approach in the past.”
Until now it has been mandatory for companies to conduct drill stem tests (DSTs) within a fixed timeframe to prove that finds are commercially viable. But the two companies have either delayed or did not conduct DSTs.
The policy approved yesterday gives firms an option to either relinquish the blocks or still conduct DSTs.
If a company opts for conducting the DST, it will be allowed to recover only 50% of the cost of the test, or $15mn, whichever is lower, as a penalty for the delay, the government’s statement said.
The companies can also develop the finds without conducting a DST but in that case these discoveries will be treated as a separate entity for accounting purposes and cost recovery will be allowed after commercial production.
The contractors have to opt for one of the options within 60 days of approval to prevent relinquishment of the area with discoveries, the statement added.
