The Indian Union Cabinet has endorsed a new policy framework meant to incentivise the development of enhanced recovery methods for oil and gas operations. Companies would be offered 50% cut on the RUP4,500/t (US$62.5/t) oil cess rate and 75% cut in royalty in order to boost domestic output. India's oil fields are ageing and the domestic oil and gas production is expected to decline if no enhanced recovery techniques are applied. With the introduction of enhanced oil recovery techniques, approximately 120 Mt of additional oil could be unlocked in the next 20 years.
The new policy will be effective for 10 years from the date of its notification while the fiscal incentives will be available for a 10-year period starting from the production start in case of enhanced recovery or unconventional hydrocarbon production method projects.
The monitoring and implementation of the new policy will be ensured by an enhanced recovery committee which will comprise representatives from the Ministry of Petroleum and Natural Gas (MoPNG) and the Directorate General of Hydrocarbons (DGH).
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