Hindustan Times: Govt May Let Market Set Prices for Gas, Oil

In a bid to incentivise future exploration of hydrocarbon fields in the prevailing low price scenario, the government has proposed a free natural gas pricing regime and the introduction of a revenue sharing model to replace the production sharing contract (PSC) regime used at present.

This model, if approved, would be applicable to all future auctions of oil and gas blocks.

The oil ministry floated a public consultation paper on Monday, in which it also proposed a uniform licensing policy, which would allow companies to explore everything from oil and gas to shale oil and gas and coal bed methane (CBM). At present, conventional exploration is governed by the so-called New Exploration Licensing Policy (NELP), while CBM has a separate policy. Shale oil and gas exploration is not covered under any structure as of now.

Several domestic and foreign explorers, including Reliance Industries Ltd (RIL), BP Plc (British Petroleum) and the government-owned ONGC Ltd have been demanding market-determined gas pricing. Interestingly, the paper comes just a day after Canada-based Niko Resources said it had decided to exit RIL’s gas block off the Odisha coast. MORE