The government of India wants to simplify licensing rules and offer price incentives to recover gas from difficult onshore fields, in an attempt to boost oil and gas production worth almost US$40bn.
Under the new rules, companies would have more freedom to set gas prices from new discoveries and existing fields still under development (not yet in production); prices would be capped according to the landed price of alternatives such as fuel oil, naphtha, coal and LNG and updated every six months.
The reform is expected to raise gas production by at least 35 mcm/d for 15 years. In addition, the exploration licences of 28 discovered oil and gas fields, mainly awarded to Oil and Natural Gas Corporation (ONGC) and Oil India, will be extended.
Regulated low prices for gas produced in deep-water fields have limited investments in spite of a rising energy demand. Reliance Industries is currently in a legal battle with the Indian government over gas pricing, while ONGC expects higher prices before starting production from its east coast deep-water block.
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