Existing policy

framework

Existing Policy Framework

Petroleum Act and
Rules
Regulates the import
into India, transfers
within, storage,
production, refining and
blending of petroleum.
Prohibition on prospecting and
mining except under a license or
lease granted under the rules

Central Government has power to

grant licenses or leases in respect
of any potential exploration
State Government has power to
grant license or lease over lands
vested with it
Person obtaining exploration
license obtains exclusive right to a
lease for producing (i.e. extracting)
oil/gas over any part of area
covered in license.

Petroleum and Natural

Gas Regulatory Board
Act 2006 (PNG)
The PNG Act provides for
a legal framework for
downstream gas sector
regulation and
development of natural
gas pipelines and city or
local gas distribution
networks.
Manages disputes between the
government and other entities

Lack of clear cut policies often leads

to long cases and policy paralysis

National Exploration
Licencing Policy
NELP is a nodal agency
to provide a level playing
field to both public and
private sector companies
in E&P of hydrocarbons
Promotes investments in E&P
Sector by facilitating allotment of
exploration blocks through
international competitive bidding
Allows for FDI up to 100 % in E&P
activities

Renewed interest among private

players bringing massive foreign
capital in the sector

Environmental
Regulatory Committee
Takes care of protection
of natural resources and
environment to prevent
damage and for
companies to follow
environment friendly
practices
Under the tutelage of Environment
Ministry

Check the contemporary practices

being used by the company

Taking necessary and adequate

steps for environment protection

NELP
nodal agency to provide a level playing field to both public and private sector companies in E&P
of hydrocarbons.
It isnt a law by itself but ids guided by law hence policies determined by the entity has been
questioned by various PIL

NELP promotes investments in E&P Sector by facilitating allotment of exploration blocks through
international competitive bidding. Since 1999 NELP has accelerated the pace of petroleum and
natural gas exploration activities by providing a level playing field for all parties to compete for
award of exploration acreage. 68 National, private, and foreign companies compete on equal
terms and conditions to secure PEL through bidding

NELP allows for FDI up to 100 % in E&P activities. Over the past decade, more than 275 blocks
allotted over nine bidding rounds, resulting in discovery of sixty-eight O&NG fields

Tax holiday given has been over

There is no mandatory state participation through ONGC/OIL nor is there any carried interest of
the State. ONGC and OIL compete for obtaining PEL on a competitive basis instead of the earlier
system of granting them on nomination basis. At the same time, ONGC and OIL also get the
same fiscal and contractual terms available to private companies. Open availability of
exploration acreages provides continuous window of opportunities to oil companies. The
acreages are demarcated on a grid system and ending preparation of grid, blocks are carved out
for offer. Accordingly, companies are free to choose and propose acreages

Royality payment half for deep waters and frontier areasfor first seven years of commercial production

Steps:

Identification of blocks under NELP

notice inviting offers for exploration of O&NG
Submission of contract requirement
Furnishing of bond amount
Qualification of bid
Evaluation of bid and rejection criteria
Contract allocation with successful bidder under Model Production Sharing contract
Clearances

Clearances are not assisted by NELP

Non-resident companies pay a higher tax rate as compared to national players hence a hinderance

NELP is often criticized for its failure to attract widespread participation by large international oil and gas
operators. An Open Acreage licensing policy (OLAP) has still not been undertaken which gives companies to
have freedom to select any block on offer at any time