Thursday, 26 September 2013

Government to allow private energy firms to explore shale oil and gas from their blocks: Veerappa Moily

 Oil Minister Veerappa Moily said on Thursday that the government would soon allow private energy firms such as Reliance IndustriesBSE -1.14 %, Cairn IndiaBSE -0.30 % and BP and BG to explore shale oil and gas from their existing fields.

"The cabinet has approved shale gas exploration policy for national oil companies, Oil India and ONGC. Soon, the same will be extended to other companies including private energy players," Moily told reporters after the inaugural session of the Global HSE Conference.

The cabinet on Tuesday approved a shale gas and oil exploration policy, which paved way for state-run ONGCBSE -0.98 % and Oil India to hunt for non-conventional resources in blocks awarded to them without auction.

"Initially, I was in favour of an integrated shale gas policy for all players, but there were some issues to be resolved. We decided to move ahead with ONGC and OIL. At least one step forward is better than waiting," Moily said.

He said, the government would also launch the tenth bidding round of oil and gas blocks after certain policy issues are resolved. "We have nine rounds so far. Several issues came up in the Nelp (New exploration licensing policy) rounds. We have learnt lessons. We are working on the next round. The tenth will be the perfect round," he said.

The government has auctioned more than 250 blocks under nine Nelp rounds since 1999, but only two of them are so far producing, that too with several disputes, oil ministry and industry officials said. Reliance Industries, which is producing oil and gas from its KG-D6 block auctioned in the first Nelp round, is facing several contractual issues. It evoked the arbitration clause of the contract in last year after the oil ministry disallowed it to recover its expenditure in developing the D6 gas fields because output from the block fell sharply.

Moily said, the government would resolve differences over interpretations of various contractual provisions soon. "I had a three and a half hour meeting with Reliance and BP last week . That shows we want to resolve the issues," he said.

RIL is protesting the government's move to deny rights over eight gas discoveries worth more than $8 billion because timeline expired and challenged the oil ministry's proposal to deny it the benefit of increased gas price from April 1.

Moily said gas price hike proposed by the Rangarajan committee would be uniformly applicable. "There are no gray areas. There will be uniform gas price for all," he said. He, however, declined to comment on any particular case.

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