Govt okays parallel conventional & unconventional hydrocarbon search

New Delhi: The government on Wednesday permitted simultaneous exploitation of unconventional hydrocarbon resources like coal-bed methane (CBM) and shale and conventional oil and natural gas to boost domestic output and spur investments by firms like Essar and ONGC.

This permission would, however, be subject to payment of an additional 10 per cent profit petroleum or production level payment.

Currently, a permit for exploration and production of conventional crude oil and natural gas does not allow exploitation of shale oil and gas and CBM. The vice versa is also true.

The Union Cabinet headed by Prime Minister Narendra Modi approved the policy to permit exploration and exploitation of unconventional hydrocarbons, Finance Minister Piyush Goyal told reporters here.

"This policy will enable the realisation of prospective hydrocarbon reserves in the existing Contract Areas which otherwise would remain unexplored and unexploited," he said.

With this policy dispensation, new investment in exploration and production (E&P) activities and chances of finding new hydrocarbon and resultant increased domestic production thereof is expected.

Commenting on the decision, Vilas Tawde, Director & CEO, Essar Oil & Gas Exploration and Production, said this will open up hereto untapped hydrocarbon resources and boost domestic output to meet energy needs of the world's fastest growing economy.

Essar, he said has as much as 7 trillion cubic feet of shale reserves in its Raniganj CBM block in West Bengal. Of this 1.5 Tcf is recoverable. Similarly, its Mehsana block has 0.5 Tcf of recoverable CBM resources. "These resources can now be produced," he said.

As per existing contractual regime of Production Sharing Contracts (PSCs), existing contractors are not allowed to explore and exploit CBM or other unconventional hydrocarbons in already allotted licensed/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) like ONGC in nomination regime constitute a significant part of India's sedimentary basin.