Enhancing Domestic Oil & Gas Production - Salient Recommendations

Enhancing Domestic Oil & Gas Production - Salient Recommendations

Question: The Kelkar Committee has recently submitted a report on Roadmap for Enhancing Domestic Oil and Gas Production and Sustainable Reduction in Import Dependency by 2030. Provide the salient recommendations of this report

- The committee under Dr. Vijay Kelkar has submitted the Report on Roadmap for Enhancing Domestic Oil and Has Production and Sustainable Reduction in Import Dependency by 2030

- Expediting appraisal of Indian Basins

- Committee has recommended the creation of the National Data Repository along with further appraisals of Indian basins via seismic surveys and parametric well drilling for drawing investor interests for development of Indian basins

- Availability of data for basins will improve investor confidence for taking informed investment decisions

- Required funds estimated at INR 7000 crore should be made available to Directorate General of Hydrocarbons through the Oil Industry Development cess to make basin appraisal easier

- Data residing with the Directorate General of Hydrocarbons Roadmap for Reduction in Import Dependency in the hydrocarbon area by 2030 and final report for national oil companies and private companies for relevant fields should be made available to NDR at the earliest

- Committee also recommends OALP or Open Acreage Licensing Policy to be initiated parallel to the New Exploration and Licensing Policy to provide operators the chance to identify acreages of interest

- Right of First Refusal or ROFR should be used as incentive for conducting basin appraisals

- There should be flexibilities in completion of MWP on alternate blocks

- Operators must be provided with the flexibility of fulfilling outstanding MWP on varied blocks with similar characteristics wherein the operator holds valid exploration license

- Two alternate PSC models were also proposed for Indian basins associated with global best practices and suitability to Indian geological context

- The committee also proposed two fiscal regimes for deployment

- Model I: PSC linked to Investment Multiple, with modified contract administration

- including self certification of costs by the contractors

- Model II: PSC with 'biddable' supernormal profits tax Roadmap for Reduction in Import Dependency in the Hydrocarbon Sector by 2030

- Administrative reforms for more efficient implementation of the PSC model has also been outlined by the committee; structural changes have been put forth to streamline the fiscal administration of PSCs.

- Safeguarding fiscal interest through assessment of GoI take comprising royalty, corporate income tax and profit oil; profit or profit has is a form of levy shared with the government can be more effectively assessed through revenue authorities

- Improving contractibility and administration through proposed initiatives to create ore stability and improve administration of the contracts

- Self certification of expenditures is the best practice across the world, especially in dealing with business liabilities

- Revenue authorities would conduct audits of corporate liabilities as per standard procedure to prevent tax evasion/misstatement

- Institution of well defined process for contract extension with clearly delineated timelines, roles, responsibilities and criteria

- The committee also proposed development of a natural gas grid for increasing share of natural gas in energy mix

- The committee also recommended unbundling gas transportation from production or marketing

- It also recommended leveraging PPP models and government sources of funding and encouraging use of gas for generating power in CHP/CCHP mode

- Gas for CHP and CCHP would be encouraged in terms of roadmap for reduction in important dependency in the hydrocarbon sector

- The committee has also proposed the creation of Project Management Committee for dealing with seamless project execution

- Transition to market determined gas pricing by 2017 or next pricing period was also recommended by the committee

- The ToR s of the committee also suggest market determined gas pricing should start from the close of the 12th 5 Year Plan

- Among supply side measures, the committee has recommended development of national pipeline infrastructure along a common carrier principle for demand and supply centres across the nation

- Development of templates and guidelines for effective regulation of has contracts by downstream regulatory, PNGRB to ensure transactions are conducted with transparency and contracts are at par with global best practices

- Committee also recommended developing more sources of gas such as CBM, shale, hydrates and coal gasification

- It has also suggested periodic and stepwise revision of consumer prices to bring them in line with market prices while educating consumers and sensitising them

- Establishment of the Institution of a Technology Advisory Council should rest within the petrol and natural gas ministry

- Policy setting, identification of key thrust areas of R&D and R&D facilitation through promotion of industry wide linkages was also suggested

- The Kelkar committee proposed of a strong monitoring mechanism which administrates efficient guidelines and encourages regular knowledge of results

- The committee also indicated that international relationships will be leveraged

- Potential partnership model has been put forth to advance basic research in the country in an upstream E&P similar to that leveraged by JCERD

- Government support for innovative research and development projects was also proposed

- Leveraging India’s demographic divided is another aim put forth by the committee; it has also proposed improvement in the quality of education to be in line with international standards

- Improving industry academia interface for international reach is another aim

- The committee also proposed an institutional mechanism for skill development and the creation of an International Sourcing Group

- There should also be energy diplomats positioned across the world for furthering the agenda of energy security

- Acquisition of stakes in oil and has prospecting companies is another major point stressed by the committee, apart from the establishment of a Centre for Policy Research on Arabian Gulf Region countries

- Expediting creation of transnational gas pipelines is another proposal put forth by the committee

- especially projects such as IPI and TAPI

- The committee has also given recommendations for improving the functioning of National Oil Companies and strengthening them

Facts and Stats

- The Kelkar Committee is a 10 member committee headed by Dr. Vijay Kelkar

- Kelkar Committee was formed in the year 2013-2014

- Committee favours contract extension for perpetuity

- Production Sharing Contract Regime was more suited for Indian settings, according to the Committee