MINISTRY OF PETROLEUM AND NATURAL GAS 

RESOLUTION 

New Delhi, the 28th February, 2019 

No. O-12015(11)/1/2019-ONG-II.—To increase exploration activities, attract domestic and foreign investment in unexplored/unallocated areas of sedimentary basins, and enhance domestic production of oil and gas from existing fields and promote ease of doing business by streamlining and expediting the approval processes, the Government of India hereby notifies the following policy reforms: 

1. Categorization of Sedimentary Basins: 

Sedimentary Basins of India are classified into the following three categories:  

1. Category-I Basins: Basins which have proven hydrocarbon resources with established commercial production. 
2. Category-II Basins: Basins which have contingent resources which are yet to be converted to recoverable reserves and commercial production. 
3. Category–III Basins: Basins which have prospective resources with no hydrocarbon discovery and few exploration inputs and data. 

The Category-wise list of Sedimentary Basins of India is at Annexure-I.  

2. Increasing Exploration in Unexplored/Unallocated Areas: 

Unexplored areas will also include unallocated areas which have not been allocated to any entity for exploration and production. 

The policies as below are to be applicable prospectively only to such areas to be allocated in future: 

   ^{_{2.1.  Fiscal and Contractual Terms for areas in Category - I Basins}} 

1. The Exploration blocks in Category-I Basins will be awarded on the basis of international competitive bids based on exploration cum revenue sharing. For the purpose of revenue share, the bidders will quote the percentage of revenue to be shared with the Government against Lower Revenue Point (LRP) and Higher Revenue Point (HRP). 
2. The Lower Revenue Point (LRP) is equal to USD 0.05 million of revenue per day and Higher Revenue Point (HRP) is equal to USD 7 million revenue of per day. The Revenue sharing ceiling at HRP will be set at 50%. 
3. For evaluation of bids, weightage will be as under: 
   1. Minimum Work Programme (MWP) – 70%   
   2. Revenue share being offered to the Government- 30% 

       4. For evaluation of MWP, weightage will be as under: 

1. Seismic survey - 20%  
2. Number of Exploratory wells - 80%.  
3. The time spread for performing seismic survey and completion of committed number of exploratory well will also be submitted by bidders. However, it will be non-biddable.

       5. Timelines for completion of MWP will be 3 years for onland and shallow water blocks (upto 400 meters of water depth), however, the same will be 4 years for Deepwater (beyond 400 meters but up to 1500 meters of water depth) and Ultra deep water blocks (beyond 1500 meters of water depth). 

       6. There will be no bar on additional exploration work and activities beyond MWP. 

       7. All other provisions will be similar to that of existing Hydrocarbon Exploration and Licensing Policy (HELP). 

   ^{_{2.2.   Fiscal and Contractual Terms for areas in Category-II and Category-III Basins}} 

1. The Exploration blocks in Category-II and Category–III Basins will be awarded on the basis of international competitive bids based exclusively on exploration work programme. 
2. All statutory levies including royalty will be paid by the Contractor. 
3. There will be no revenue or production sharing with Government except in case of a windfall gain. A Windfall gain accrues to the Contractor when revenue net of royalty from the contract area exceeds USD 2.5 billion in a financial year. Such revenue will be shared with Government as below: 

   2.3.   Other Contractual Terms: 

1. Royalty rates as applicable under HELP contractual regime will apply.  
2. To expedite production, concessional royalty rates will be applicable if production is commenced within four years for onland and shallow water blocks, and five years for deep water and Ultra deep water blocks from the effective date of contract. Royalty rates and basin category wise concessional royalty rates are at Annexure-II.  
3. In case commercial production is not commenced in the above prescribed time period, then royalty at existing rates will be applicable. 
4. The Contractor will have full marketing and pricing freedom to sell on arm’s length basis.  Discovery of prices will be on the basis of transparent and competitive bidding. No exports will be allowed. There will be no allocation by Government. 
5. The Contractor will have liberal freedom to transfer/exit the block provided work programme has been adhered to. However, a suitable penalty mechanism will be devised for non-completion of work programme. 
6. There will be adequate flexibility to revise the Field Development Plan (FDP) with the concurrence of Directorate General of Hydrocarbons (DGH). 

3.Empowered Committee of Secretaries 

The Empowered Committee of Secretaries (ECS) comprising of Finance Secretary, Law Secretary, Secretary, Department of Expenditure, Secretary, Department of Economic Affairs and Secretary, Petroleum and Natural Gas, constituted vide notification no. O-27011/1/2017-ONG-II (Volume I) dated 29.06.2018 published in the Gazette of India, will perform the same functions as assigned to it under HELP with respect to this Policy also. The ECS will also be empowered to take decisions for removal of difficulties, if any, in implementation of this Policy. 

4.Marketing and Pricing Reforms for Natural Gas 

1. In case of the existing contracts, marketing and pricing freedom to sell on arm’s length basis through competitive bidding will be permitted to those new gas discoveries whose Field Development Plan (FDP) will be approved for the first time after the date of issuance of this policy. In case of nomination fields given to NOCs, marketing and pricing freedom will be provided subject to the condition that FDP for new gas discoveries is approved by DGH. The New Domestic Natural Gas Pricing Guidelines, 2014 and Gas Utilisation/Allocation policy will not be applicable on such new gas discoveries.   
2. To incentivize additional gas production from Administered Price Mechanism (APM) fields, reduction in royalty by 10% of the applicable royalty will be granted on the additional production over and above BAU scenario. BAU scenario will be approved by DGH on third party evaluation. 
3. Existing contracts already having marketing and pricing freedom would continue on the existing terms. 

5.Empowered Coordination Committee 

An Empowered Coordination Committee under the Cabinet Secretary comprising of representatives of Ministry of Environment, Forest and Climate Change, Ministry of Defence, Department of Space and other relevant agencies/authorities will be constituted for streamlining and expediting grant of approvals/clearances. 

6.Dispute Resolution Mechanism 

A Committee of external eminent persons/experts will be constituted for dispute resolution. For existing contracts, disputes or differences between the Contracting parties can be referred to the Committee if both the parties to the contract agree in writing for such conciliation or mediation and further agree to not invoke arbitration proceedings thereafter. This provision will also be incorporated in all future contracts. 

AMAR NATH, Jt. Secy. 

Annexure-I Category-wise list of 26 Sedimentary Basins of India 

Category I          

1.Krishna -Godavari Basin 

2.Mumbai Offshore Basin  

3.Assam Shelf Basin  

4.Rajasthan Basin  

5.Cauvery Basin  

6.Assam-Arakan Fold Belt  

7.Cambay Basin  

Category II 

1.Saurashtra Basin  

2.Kutch Basin  

3.Vindhyan Basin  

4.Mahanadi Basin  

5.Andaman-Nicobar Basin  

Category III 

1. Kera|a -Konkan Basin  
2. Bengal-Purnea Basin  
3. Ganga-Punjab Basin  
4. Pranhita-Godavari Basin  
5. Satpura-South Rewa-Damodar Basin  
6. Himalayan Foreland  
7. Chhattisgarh Basin  
8. Narmada Basin 
9. Spiti -Zanskar Basin  
10. Deccan Syneclise Basin  
11. Cuddapah Basin 
12. Karewa Basin 
13. Bhima -Ka|adgi Basin  
14. Bastar Basin

Annexure-II 

Royalty rates and Basin category-wise Concessional Royalty rates   

Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064 and Published by the Controller of Publications, Delhi-110054.

                                    _{Digitally signed by} 

MANOJ KUMAR MANOJ KUMAR VERMA 

            VERMA