The Indian government has tightened the norms for announcing oil and gas discoveries to prevent exploration companies from over-reporting or drawing economic and political capital from new finds.
Exploration regulator Directorate General of Hydrocarbons (DGH) has been assured by the Petroleum Ministry and the bourses that companies engaged in drilling would adhere to the new disclosure norms.
In the past, companies like Oil and Natural Gas Corp (ONGC), Reliance Industries and Gujarat State Petroleum Corp (GSPC) have strived to make economic or political capital of oil and gas discoveries without informing DGH and getting a proper appraisal done of the discovery, official sources said.
"The new discovery disclosure norms were circulated to the oil exploration companies a fortnight back," Petroleum Ministry sources said.
While it is up to the market regulator Securities and Exchange Board of India (SEBI) to take action against any commercially manipulative information, it has asked DGH to keep it informed of any violations.
The London Stock Exchange (LSE) too has been roped in.
In response to a DGH communication two months ago informing it of discovery disclosure violations by Britain's Cairn Energy, LSE stated, "It is forwarding the letter to appropriate authorities."
LSE "has also asked DGH to keep it informed of any further violations", the sources said.
Exploration companies can now make announcements of oil or gas discoveries only if after it is vetted either by the market regulator or other designated authority.
"The discovery has to be informed simultaneously to DGH and the market regulator. In effect, the exploration companies have to fulfil both obligations simultaneously," an official source said.
The penalty for violation could be a crackdown by the market regulator, or, in the case of the Petroleum Ministry, a cancellation of the exploration license, which would need extreme provocation, the sources said.
The disclosure norms are in tune with India's keenness to follow international practices that make it mandatory for proper appraisal and expert verifications before announcements are made of any new oil or gas discovery, the sources added.
Over the last one month, India has had two new promising gas discoveries. The first is in Rajasthan in an exploration block near the Pakistan border held by Focus Energy, and the second in the Krishna-Godavari block held by GSPC at a shallower sea level than the previous deep sea find.
"The new gas discovery by GSPC is a very promising one. The find is being appraised for assessing the reserves. It opens up new possibilities as the gas has been found in the upper cretaceous level," the source said.