Petroleum Sector Current Affairs

Cabinet approves policy framework for exploitation of unconventional hydrocarbons

Union Cabinet has approved policy framework to permit exploration and exploitation of unconventional hydrocarbons such as Shale oil/gas, Coal Bed Methane (CBM) etc. It will be carried out under existing Production Sharing Contracts (PSCs), CBM contracts and Nomination fields to encourage existing contractors in licensed or leased area to unlock full potential of unconventional hydrocarbons in existing acreages.

Significance

With this policy, there will be complete shift from One hydrocarbon Resource Type to Uniform Licensing Policy which is presently applicable in Discovered Small Field (DSF) Policy and Hydrocarbon Exploration & Licensing Policy (HELP).

Benefits of this Policy Framework

It will enable the realization of prospective hydrocarbon reserves in existing contract areas which otherwise would have remain unexplored and unexploited. It will give impetus to new investment in exploration and production (E&P) activities and chances of finding new hydrocarbon discoveries and increasing domestic production. It will also spur exploration and exploitation of additional hydrocarbon resources giving impetus to new investment, economic activities, additional employment generation and thus benefitting various sections of society. This will also lead to induction of new, innovative and cutting-edge technology and forging new technological collaboration to exploit unconventional hydrocarbons.

Background

Under existing contractual regime of PSCs, existing contractors are not allowed to explore and exploit CBM or other unconventional hydrocarbons in already allotted licensed or leased area. Similarly, CBM contractors are not allowed to exploit any other hydrocarbon except CBM. Acreages held at present by various contractors in PSCs and CBM blocks and National Oil Companies (NOCs) in nomination regime constitute a significant part of India’s sedimentary basin.

Month: Categories: India Current Affairs 2018

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India to work with China on OPEC’s Asian Premium issue

India is coordinating with China and other Asian countries to raise voice against Asian premium charged by Organisation of the Petroleum Exporting Countries (OPEC). Indian Oil Corporation Chairman Sanjiv Singh will coordinate with head of China National Petroleum Corporation (CNPC) to chalk out strategy that will result in getting better price from OPEC countries.

Asian Premium

Asian Premium is extra charge being collected by OPEC countries from Asian countries when selling oil in comparison to western countries. For example, production cost of one barrel of crude oil is Rs. 100 in OPEC countries. These countries want to make profit of Rs. 100 so they ideally should sell one barrel for Rs. 200. But under Asian Premium pricing mechanism, OPEC countries gives discriminatory treatment to Asian countries (though being largest importer of OPEC produced oil) by charging them Rs. 220 per barrel and on other side giving discount to western countries by selling them at Rs.180 or below one 180 per barrel. The discriminatory Asian Premium is mainly used by OPEC countries to subsidised western buyers at cost of Asian buyers

India’s concern

India sources about 86% of crude oil, 75% of natural gas and 95% of LPG from OPEC member nations. It has been voicing its dissent against this discriminatory practice and has called for replacing Asian Premium with Asian Discount (dividend). India has emphasized implementation of ‘Responsible and Reasonable Pricing’ by oil producing countries, given importance of Asian markets for OPEC, particularly fast growing energy markets in the region as they are reliable and continued customer. The removal of discriminatory Asian Premium will allow poor Asian countries including India to provide energy to people who have been deprived of energy so far.

Organization of the Petroleum Exporting Countries (OPEC)

The OPEC is an intergovernmental organization (or cartel) of 14 oil-exporting developing nations that coordinates and unifies the petroleum policies of its member countries. It was established in 1960 in Baghdad, Iraq by the first five members. Its headquarters are in Vienna, Austria.

OPEC Members are Iran, Iraq, Saudi Arabia (de facto leader of OPEC), Kuwait, Qatar, United Arab Emirates (from Asia and Middle East); Algeria, Angola, Libya, Nigeria, Equatorial Guinea and Gabon (from Africa); Ecuador and Venezuela (from South/Latin America).

As of 2015, these 14 OPEC member countries accounted for an estimated 43% of global oil production and 73% of the “proven” world’s oil reserves. Two-thirds of OPEC’s oil production and reserves are in its six Middle Eastern (west Asian) countries that surround the oil-rich Persian Gulf.

Month: Categories: India Current Affairs 2018

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