Policy for Exploration of Unconventional Hydrocarbons Gets Cabinet Nod

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The Union Cabinet approved a policy framework for hydrocarbons’ exploration, permitting private companies to exploit unconventional hydrocarbons, including shale gas and coal bed methane (CBM), from their existing acreages.

Under the extant policy, while producers are not allowed to explore and exploit CBM, shale gas and other unconventional hydrocarbons from their allotted licensed area, CBM contractors are not permitted to extract any other hydrocarbons apart from CBM.

“This policy will enable the realization of prospective hydrocarbon reserves in the existing contract areas which otherwise would remain unexplored and unexploited,” a Petroleum Ministry statement said following the cabinet meeting.

An additional 10 percent profit petroleum will be levied for new CBM discoveries, while state-run oil companies will be allowed to explore and exploit unconventional hydrocarbons under the existing fiscal and contractual terms of exploration or lease license, it said.

“An area of 72,027 held under PSCs (production sharing contracts) of pre-New Exploration Licensing Policy (NELP)/NELP regime and 5,269 sq. km area under CBM contracts has been opened up for simultaneous exploration and exploitation of conventional or unconventional hydrocarbons,” it added.

Briefing reporters here, acting Finance Minister Piyush Goyal said that with the approval of this policy, there will be a complete shift from “One hydrocarbon Resource Type” to the “Uniform Licensing Policy” which is presently applicable in the new Hydrocarbon Exploration and Licensing Policy (HELP) and Discovered Small Field (DSF) Policy.

Last month, the Petroleum Ministry had amended the Petroleum and Natural Gas Rules to include shale in the definition of petroleum.

India currently has around 100-200 trillion cubic feet (TCF) of shale gas reserves in five sedimentary basins and there is a strong possibility of such reserves in the Cambay, Krishna-Godavari (KG) and Cauvery basins among others, the statement added.

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