A Joint Working Group (JWG) formed by the Ministry of Petroleum and Natural Gas (MoPNG) has suggested subsiding private operators who supply natural gas to the north eastern States.

The panel, which comprises officials from the exploration & production (E&P) sector, national oil companies (NoCs) and government in a bid to enhance oil and gas production and to attract investments, was formed last year.

India’s sedimentary basins have around 651.8 million tonnes (mt) crude oil and 1138.6 billion cubic meters (BCM) natural gas. However, around 10 per cent of the sedimentary basin area is under exploration.

Subsidy support

On enhancing natural gas supply in the north East, the JWG suggested that a subsidy of 40 per cent on supply of natural gas may be extended to every operator in the North-East region.

Besides, it also recommended that the subsidy mechanism proposed may be gradually tapered down over the next 5 years.

The JWG explained that the existing gas price mechanism in the north-east region is characterised by the coexistence of multiple gas prices, which poses significant challenges for private operators.

According to the new domestic natural gas pricing guidelines, a subsidy of 40 per cent on administered price mechanism (APM) allocated to natural gas is provided to the NoCs in the region.

However, the guidelines lack clarity in applicability of the subsidy for natural gas supplied by private operators in the north-east region. This arrangement allows ONGC and OIL to benefit from discounted gas prices and undermines the competitiveness of private companies, the JWG explained.

Participating interest

Another critical recommendation by the panel is on transfer of Participating Interest (PI) among existing PI holders under a contract.

“Management Committee (MC) may be empowered to approve PI transfer cases where the contractor intends to transfer the PI within the existing parties of the contract, subject to no change in operatorship,” the JWG said.

The recommendation aims to expedite the approval process and reduce project delays, thereby promoting transparency and ease of doing business, the panel emphasised.

Under the existing contractual provisions for various regimes such as production sharing contract (PSC) and coal bed methane (CBM), PI transfer within the existing parties of the contractor requires prior written consent from the Government.

However, this process involves a comprehensive technical, financial, and legal due diligence for each case. In such cases, as the PI holders have already undergone verification during the initial contract award stage, evaluation for any change in PI among existing parties of the contract may be foregone, it added.

Further, in many cases it has been observed that internal transfer approval can take up to six months of time-period, leading to significant project delays, the JWG said.

Published on May 12, 2025