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The Cabinet Committee on Economic Affairs on Wednesday approved a policy on testing requirements for discoveries made under the New Exploration and Licensing Policy. The policy is aimed at settling the long-pending issue regarding discoveries in five blocks of ONGC and Reliance Industries, an official statement said.
"The policy will also help in bringing out transparency and uniformity in decision-making as against the case-by-case approach in the past," the statement added.
The policy allows contractors to choose amongst the three options with regard to blocks stuck on account of testing requirements. Contractors can either relinquish the blocks, develop the block after conducting Drill Stem Test (DST) with 50 per cent of the DST cost being disallowed as penalty for not conducting the tests on time or develop the discoveries without conducting the test in a ring-fenced manner. Cost recovery for DST has also been capped at $15 million.
"If the contractor does not opt for any one of these options suggested above within 60 days of the CCEA approval, then the area encompassing these discoveries shall automatically be relinquished," the statement said.
"The approval given by CCEA would provide a way forward for development of these 12 discoveries with associated gas reserves of around 90 billion Cubic Meter (BCM) which would be valued at over ₹1 lakh crore at the current gas price of $ 4.66 per million British thermal unit (mBtu) on Gross Calorific Value (GCV)," it added.
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