NEW DELHI, India – The Indian Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi, has approved a policy of granting extensions to production-sharing contracts (PSC) for the country’s small and mid-size discovered fields.
According to ONGC, this extension relates to 28 fields, 27 of which were awarded as a result of two rounds of bidding during 1991 to 1993, with one (PY-3) separately offered for bids as a discovered field.
In many cases the recoverable reserves are unlikely to be produced within the remaining duration of the PSC contract period. In certain fields where additional recovery of hydrocarbons can be obtained only through capital intensive enhanced oil recovery/improved oil recovery (EOR/IOR) projects, the payback period would also extend beyond the current duration of PSC.
The government share of profit petroleum during the extended contract period of contract will be 10% higher than the share calculated using the normal PSC provisions in any year during the extended period, and will therefore vary from year to year based on investment multiple /post tax rate of return.
During the extended contract period, royalty and cess will be payable by all the contractors in proportion to their participating interest.
ONGC says the new policy will lead to production of hydrocarbons beyond the present term of PSC, with reserves likely to be monetized during the extended period totalling around 15.7 MM tons of oil and 20.6 MM tons of oil equivalent of gas.
Monetization of these reserves (roughly $8.25 billion) would require an additional investment of $3-4 billion.
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