News Release Details
Oil ministry's plan may delay gas-pricing policy
New Delhi 06-Aug-2007
With the committee of secretaries on gas pricing agreeing that the government cannot go back on contractual commitments for exploration acreages auctioned in the last five rounds, the petroleum ministry is loathe to the suggestion of forming a ministerial panel on the issue and delay the next round of bidding, which was expected this month but seems postponed till November. The panel's recommendations on framing a policy on prioritizing gas usage and any sort of control on pricing can legally be implemented in contracts for the seventh round of auctions only. Such policies could take anything between six months to a year. Under the circumstances, to keep on hold contracts signed for the last five auction rounds as per laid down policy, or create an atmosphere of uncertainty over kihem, will adversely impact investors' outlook towards Indian exploration. There is also the view that a ministerial or Cabinet panel is unlikely to hear any new fact and presentations taken by it from stakeholders will generally be the same as had been made to the secretary panel? The time spent on a repeat exercise will thus only put pressure on explorers, both in private and public sector, who have pumped or committed huge amounts to start production from their finds made hi auctioned acreages. Prolonging the uncertainty over pricing issue whether government will exercise control on prices in violation of market-determined pricing regime promised in production contracts will put off lenders and oilfield service providers from ventures. This can have a devastating effect by delaying production and fiscal schedules, especially when there is a global shortage of deepwater rigs. Technically too, a ministerial or Cabinet panel will open a Pandora's box as far as administration of auctioned acreages is concerned.
New Delhi 06-Aug-2007
With the committee of secretaries on gas pricing agreeing that the government cannot go back on contractual commitments for exploration acreages auctioned in the last five rounds, the petroleum ministry is loathe to the suggestion of forming a ministerial panel on the issue and delay the next round of bidding, which was expected this month but seems postponed till November. The panel's recommendations on framing a policy on prioritizing gas usage and any sort of control on pricing can legally be implemented in contracts for the seventh round of auctions only. Such policies could take anything between six months to a year. Under the circumstances, to keep on hold contracts signed for the last five auction rounds as per laid down policy, or create an atmosphere of uncertainty over kihem, will adversely impact investors' outlook towards Indian exploration. There is also the view that a ministerial or Cabinet panel is unlikely to hear any new fact and presentations taken by it from stakeholders will generally be the same as had been made to the secretary panel? The time spent on a repeat exercise will thus only put pressure on explorers, both in private and public sector, who have pumped or committed huge amounts to start production from their finds made hi auctioned acreages. Prolonging the uncertainty over pricing issue whether government will exercise control on prices in violation of market-determined pricing regime promised in production contracts will put off lenders and oilfield service providers from ventures. This can have a devastating effect by delaying production and fiscal schedules, especially when there is a global shortage of deepwater rigs. Technically too, a ministerial or Cabinet panel will open a Pandora's box as far as administration of auctioned acreages is concerned.