Business Daily from THE HINDU group of publications
Friday, Mar 07, 2008
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Business Daily from THE HINDU group of publications Friday, Mar 07, 2008 ePaper | Mobile/PDA Version |
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Corporate
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Outlook Industry & Economy - Petroleum
Establishing a benchmark of internal rate of return for declaration of the commerciality of a discovery Set of vendor qualification criteria for each major category of contract Richa Mishra New Delhi, March 6 Reliance Industries Ltd (RIL) has voiced concern on the Petroleum Ministry’s draft guidelines for enhancing the effectiveness of Management Committee (MC). A management committee monitors hydrocarbons exploration activities in the areas or blocks awarded to oil and gas companies under the New Exploration Licensing Policy (NELP). The private sector major has said that the proposals will result in slowing down the decision-making process and reduce the operational flexibility of the investors. The draft guidelines to some extent deviated from the commitments under the production sharing contract (PSC), which is signed between the Government and the exploration company, for exploiting and developing the oil and gas blocks, it said. RIL has put forth its views at a meeting convened by the Ministry early this week. The Ministry has sought views of the exploration companies on the proposed guidelines. Those present in the meeting included BP, BG, Niko Resources, Cairn, ONGC and Premier Oil. The Ministry is likely to take a decision soon, a Ministry official said. Meanwhile, the Association of Oil and Gas Operators in India has requested the Ministry for more time, so that its members can deliberate on issues. Sources told Business Line that the existing management committees have a certain role and empowerment and that it is answerable to the Petroleum Ministry. In order to deal with minor issues, the flexibilities that were built in the NELP policy framework and in the PSC are being modified by way of guidelines. Some of these would adversely affect the physical performance of the companies, sources said. RIL has opposed the proposal for establishing a benchmark of internal rate of return for the declaration of the commerciality of a discovery. The draft guidelines have proposed a benchmark for evaluation of development of discoveries, which are not financially viable on a standalone basis. It also says that any extension in timeline for such discovery would be considered by Government on a proposal of the management committee to be examined by the Directorate General Hydrocarbons (DGH). The DGH, as per the proposed guidelines, may also propose the development of common facilities for adjacent blocks to be funded, to make such development viable. The draft guidelines have also proposed that the committee may consider a set of vendor qualification criteria for each major category of contract or supply. “This would restrict operations and curtail sourcing of the best technologies and resources,” sources said. “Any guideline over a period becomes restrictive in nature, which would not be good for the companies in the business. Besides, the sector is very different from others, and different issues will come up at various points, we cannot have guidelines at every juncture to tackle them,” sources said. More Stories on : Outlook | Petroleum | Reliance Industries Ltd
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