The Cabinet Committee on Economic Affairs on Thursday approved a proposal to provide marketing and pricing freedom to natural gas from deepwater, ultra-deepwater, high temperature high pressure fields that are not yet producing or future discoveries in such areas.

While there will be marketing and pricing freedom, keeping in mind the consumer interest the rates will be capped by the lowest among the weighted average price of fuel oil and imported LNG or weighted average of fuel oil, naphtha and imported coal, Dharmendra Pradhan, Minister of State (Independent Charge) for Petroleum and Natural Gas, said.

The move will help companies such as Reliance Industries Ltd, ONGC and Gujarat State Petroleum Corporation (GSPC) develop and produce from their deepwater, ultra-deepwater and high temperature high pressure fields.

“This would help in production of 35 million standard cubic metres a day of natural gas production for the next 15 years translating to around 6.7 trillion cubic feet of natural gas. This decision would help unlock Rs 1.8 lakh crore of investments,” Pradhan added.

At current prices, natural gas from deepwater, ultra-deepwater and high temperature high pressure fields could fetch $7 per million British thermal units. ONGC had said earlier that production from such fields will be viable only if it is higher than $6 per mBtu.

The weighted average of the alternate fuels will be over one year and the the price cap will be revised every six months.

The CCEA also agreed to grant extension to production sharing contracts of 28 pre-NELP (New Exploration Licensing Policy) fields with a 10 per cent increase in governments share of earnings.

In another decision for the oil & gas sector, the Cabinet approved a hydrocarbon exploration licensing policy which not only provides for marketing and pricing freedom for future hydrocarbons discoveries but also a uniform licence for producing all forms of hydrocarbons.

“A new hydrocarbon exploration licensing policy has been approved. Firstly, all forms of hydrocarbons will be given through one license — a uniform license. Secondly, the production sharing contract will be done away with and a revenue sharing model will be adopted. Thirdly, we will move to an open acreage policy. We will not create blocks, there will not be any specified bidding rounds. The data will be available on the national data repository and companies can approach the government for which areas they would like to bid for. Fourth, the marketing and pricing freedom will be provided,” Pradhan said.

In another long pending decision, the CCEA decided to give back the Ratna and R Series fields to ONGC. The fields which were awarded to an Essar Oil led consortium in 1996 has not seen a production sharing contract being signed yet.

The CCEA also approved provision of Rs 8,000 crore for three years through the Union Budget for the Pradhan Mantri Ujwala Yojana. The scheme is for providing 5 crore BPL households with concessions on LPG connections over the next three years.

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