Potentially paving the way for India to tap 90 billion cubic meters (bcm) of gas reserves, the government on Wednesday cleared a policy to develop 12 gas discoveries, under the New Exploration Licencing Policy.
Government-owned Oil and Natural Gas Corporation (ONGC) Limited, and Mukesh Ambani-promoted Reliance Industries Limited (RIL) are each set to develop six discoveries.
Taken together, the discoveries are valued at $15.8 billion (about Rs 94,800 crore) at the current domestic gas price of $4.66 per million British thermal units (mBtu), the government said.
A government release said that the decision by the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi will “settle the long pending issue” that had held up the development and “will also establish a clear policy for future.”
“The policy will also help in bringing out transparency and uniformity in decision making, as against the case-by-case approach followed in the past,” the government further said.
The government has allowed ONGC and RIL to either develop these discoveries at their own cost or by using a testing mechanism prescribed by the Directorate General of Hydrocarbons, in which case cost recovery has been capped at $15 million (about Rs 90 crore).
Market analysts however say that only about 30-40% of the reserves cited may actually be recovered.
“It takes anywhere up to six years to develop a block,” Dhaval Joshi, a research analyst with Mumbai based Emkay Global Financial Services Limited said.
“If the contractor does not opt for any one of these options suggested above, within 60 days of the CCEA approval, then the area encompassing these discoveries shall automatically be relinquished,” the government release said.