Ministry of Petroleum and Natural gas Current Affairs - 2019
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In the backdrop of the US refusal to extend the sanctions waiver for India to import crude from Iran, the Ministry of Petroleum and Natural Gas has taken steps necessary steps to end the imports from Iran.
Even though India has urged the US to restore the sanction waivers it has decided to not to proceed with the purchase as the oil trade cannot happen in anticipation.
Ministry of Petroleum and Natural Gas has stated that a robust plan for an adequate supply of crude oil to Indian refineries is in place. It has been stated that shortfall will be met through alternate supply sources available in Saudi Arabia, Kuwait, UAE and Mexico.
Meeting the Shortfall
India which is the world’s third-biggest oil consumer meets more than 80 per cent of its oil needs through imports. In 2017-18, Iran was India’s third-largest supplier after Iraq and Saudi Arabia and about 10 per cent of total needs were met through imports from Iran.
India can avail optional volumes (over and above the term contracts) from a number of suppliers which it can exercise to make up for any shortfall from Iran. India also plans to avail the route of spot market to source crude.
But the cause of concern is more related to prices in India. When President Trump had first pulled out of the nuclear deal, oil shot up to over USD 85 a barrel and it fell to near USD 50 after the US administration unexpectedly granted the waivers.
The government has overhauled the rules for the oil and gas exploration permits. The Ministry of Petroleum and Natural Gas has released the new rules for oil and gas exploration permits:
- New rules make a departure from the from the two-and-a-half decade-old practice of having a uniform contractual regime for all sedimentary basins in the country.
- The new policy provides for different rules for areas that already have producing fields and ones where commercial production of oil and gas is yet to be established.
- New rules provide complete marketing and pricing freedom for oil and gas in future bid rounds irrespective of the basins.
- Future bids for Oil and gas acreage or blocks will be awarded primarily on the basis of exploration work commitment.
- Companies are required to pay a share of revenue from oil and gas produced in Category-I sedimentary basins such as Krishna Godavari, Mumbai Offshore, Rajasthan or Assam where commercial production has already been established.
- Companies will be charged only prevalent royalty rates on oil and natural gas in the less explored Category-II and III basins.
- Further 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-deepwater blocks from the effective date of the contract.
The new rules are being introduced to increase exploration activities, attract domestic and foreign investment in unexplored and unallocated areas of sedimentary basins, and enhance domestic production of oil and gas.
Tags: Assam • Category-I sedimentary basins • Category-II sedimentary basins • Category-III sedimentary basins • Krishna Godavari • Ministry of Petroleum and Natural gas • Mumbai Offshore • oil and gas exploration • Rajasthan