Government plans a comprehensive system to extend oilfield contracts

Source: Economic Times via Indian Economic Business News

The government is putting in place a comprehensive system to extend oilfield contracts with private and public companies to help field operators such as Cairn India know well in advance if lease for the oilfield they operate will be extended for another term. Oilfields are leased to companies for 15-25 years, but before the lease expires the company needs to know if it will retain the field so that it can decide whether or not it should invest thousands of crores of rupees to produce oil and gas. To facilitate this, the government has constituted an inter-departmental committee to extend petroleum leases in producing blocks such as BG- operated Panna-Mukta and Tapti oilfields, JTI’s Dholka oilfield and Cairn India’s Rajasthan block. The committee will also decide terms and conditions for such extensions, officials said. “The scope of this committee can be extended to include several other exploration- related issues that may include recent proposal of DGH disallowing eight discoveries in the D6 block because of some timeline issues,” one official said. Last year, the government granted 20.5 sq km additional area in the prolific KG basin to Gujarat State Petroleum Corp, as the company’s fields extend beyond its block located near gas discoveries of Reliance Industries and ONGC.