Lok Sabha Question No. 2957 (UNSTARRED), answered on 2024-12-12
Subject: Accelerate the Domestic Crude Oil Production
Ministry: PETROLEUM AND NATURAL GAS
Asked by: Dr. D Ravi Kumar

## LOK SABHA UNSTARRED QUESTION NO. 2957 TO BE ANSWERED ON 12 th December, 2024

## Accelerate the Domestic Crude Oil Production

## 2957. DR. D RAVI KUMAR:

## पेᮝोिलयम और ᮧाकृ ितक गैस मंᮢी

Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

(a)  the  measures  taken  by  the  Government  for  planning  to  increase  the  domestic  crude  oil production which declined from 37.9 MMT in Financial Year (FY) 2013-14 to 29.4 MMT in Financial Year (FY) 2024-25;

(b) whether the Government has a plan to address India's growing dependence on crude oil imports,  which  currently  meet  88%  of  the  country's  requirements,  amid  rising  demand  in FY2025-26 and beyond, if so, the details thereof;

(c) the steps are being taken by the Government to accelerate gas production growth, especially from  the  Krishna  Godavari  Basin  fields  to  meet  the  increasing  domestic  gas  consumption expected in FY 2025-26;

(d)  the  mechanism  from  which  the  Government  ensures  stable  gas  prices  as  given  in  the revised  APM  pricing  formula  and  the  impact  of  ceiling  price  mechanism  on  domestic  gas production; and

(e)  the  Government's  strategy  to  leverage  the  Open  Acreage  Licensing  Policy  (OALP)  Bid Round-IX and  future  bidding  rounds  to  expand  exploration  and  production  activities  across India's sedimentary basins?

## ANSWER

## पेᮝोिलयम और ᮧाकृ ितक गैस मंᮢालय मᱶ रा᭔यमंᮢी ( ᮰ी सुरेश गोपी )

## MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS (SHRI SURESH GOPI)

(a) About  77%  of  the  country's  crude  oil  production  is  from  mature  fields  (producing  for more than 20 years). There is a natural decline in production year on year from mature fields. To  arrest  the  natural  decline,  the  Government  approved  the  Policy  framework  in  2018  to promote  and  incentivize  Enhanced  Recovery  (ER)/Improved  Recovery  (IR)/Unconventional Hydrocarbon (UHC) production methods through fiscal incentives in the form of partial waiver of royalty and cess.

New discoveries are also needed to accelerate production. During the earlier NELP regime, a total of 254 blocks were awarded till 2012. However, only a few discoveries could be made and majority of the blocks were relinquished by operators.

Thereafter,  to  increase  domestic  production,  the  Government  unveiled  a  series  of  policy initiatives  over  the  last  10  years.  The  reforms  are  aimed  at reducing  regulatory  burden, enhancing  transparency,  increasing  investment  in  exploration  and  consequently  enhancing domestic oil and gas production. The Hydrocarbon Exploration and Licensing Policy (HELP) was  notified  on  30 th March  2016,  marking  a  major  shift  from  Production  sharing  contract regime to Revenue sharing regime with easier regulatory compliances. 144 blocks have been awarded so far in 8 bidding rounds and already 13 discoveries have been made so far.

The Government has also focussed its approach towards generating more sedimentary basin data through projects like National Seismic Program (NSP), Exclusive Economic Zone (EEZ) survey,  Andaman  Offshore  Project,  Mission  Anveshan,  Extended  Continental  Shelf  Survey and Stratigraphic wells. The Government also opened up a significant portion of its offshore areas which previously remained prohibited for exploration in the name of No-Go Area.

In addition to the above, the list of policy reforms introduced by the Government inter  alia include:

- i. Policy under Production Sharing Contract (PSC) regime for early monetization of hydrocarbon discoveries, 2014.
- ii. Discovered Small Field Policy, 2015.
- iii. Hydrocarbon Exploration and Licensing Policy (HELP), 2016.
- iv. Policy for Extension of PSCs, 2016 and 2017.
- v. Setting up of National Data Repository, 2017.
- vi. Appraisal of Un-appraised areas under National Seismic Programme, 2017.
- vii. Policy  framework  for  extension  of  PSCs  for  Discovered  Fields  and  Exploration Blocks under Pre-New Exploration Licensing Policy (Pre-NELP), 2016 and 2017.
- viii. Policy to Promote / Incentivize Enhanced Recovery Methods for Oil & Gas, 2018.
- ix. Policy Framework for exploration and exploitation of Unconventional Hydrocarbons  under  Existing  Production  Sharing  Contracts  (PSCs),  Coal  Bed Methane (CBM) Contracts and Nomination Fields, 2018.
- x. Lower  Royalty  Rates,  Zero  Revenue  Share  (till  Windfall  Gain)  and  no  drilling commitment in under Category II/III basins to attract bidders through 2019 policy.
- xi. Release  of  about  1  Million  Sq.  Km.  (SKM)  'No-Go'  area  in  offshore  in  2022 which were blocked for exploration for decades.

(b)  Government  has  also  taken  various  steps  to  reduce  import  dependency  which inter  alia include  demand  substitution  by  promoting  usage  of  natural  gas  as  fuel/feedstock  across  the country towards increasing the share of natural gas in economy and moving towards gas-based economy, promotion of renewable and alternate fuels like ethanol, second generation ethanol, compressed bio gas and biodiesel, refinery process improvements, promoting energy efficiency and conservation, etc. The Government has been promoting blending of ethanol in petrol under

the Ethanol Blended Petrol (EBP) Programme. Blending of Petrol has reached approximately 14.6%  during  Ethanol  Supply  Year  (ESY)  2023-24  and  resulted  in  approximately  forex savings of Rs. 1.09 Lakh Crores from ESY 2013-14 to ESY 2023-24. For promoting the use of Compressed Bio Gas (CBG) as automotive fuel, Sustainable Alternative Towards Affordable Transportation (SATAT) initiative has also been launched.

(c) The  Government  has  introduced a slew  of  Natural  Gas  Marketing  reforms  to  boost  the gas-based economy, which inter alia include:

-  Government  approved  'New  Domestic  Natural  Gas  Pricing  Guidelines'  in  October, 2014,  based  on  the  prices  prevailing  in  major  international  hubs  to  strike  a  balance between the requirements of both producing and consuming sectors.
-  Subsequently,  from  2015  onwards,  Government  provided  marketing  and  pricing freedom for gas under DSF, OALP, CBM regimes and for gas produced from NorthEastern Region (NER) and new gas discoveries after 28.02.2019 under all regimes.
-  To  incentivize  gas  production  from  difficult  areas  such  as  High  Pressure-  High Temperature (HP-HT) reservoirs and deepwater and ultra-deepwater areas, Government,  on  23 rd March,  2016,  granted  marketing  including  pricing  freedom  on natural gas production with a price ceiling announced on half yearly basis by Petroleum Planning and Analysis Cell (PPAC).
-  Further,  'Natural  Gas  Marketing  Reforms'  were  announced  in  October  2020,  to prescribe standard procedure to discover market price of gas to be sold in the market by gas  producers,  through  a  transparent  and  competitive  process  through  electronic bidding. Subsequently, detailed guidelines for Discovery of Market Price for Domestically Produced Natural Gas through e-bidding were issued in December 2020.
-  Gas producers having pricing and marketing freedom have been permitted additional option for gas upto 500 MMSCM per annum through gas exchanges.
-  As a further momentum to gas reforms and saving the environment, Government issued detailed guidelines for monetization of Ad-hoc/Test Gas produced during the Testing of oil and gas Well in November 2021.
-  In January 2023, Government provided clarifications on discovery of market price and sale and resale of gas produced from discoveries in Deepwater, Ultra Deepwater and High Pressure/ High Temperature areas with marketing and pricing freedom.
-  In April 2023, Government revised the domestic natural gas pricing and linked to 10% of the monthly average of Indian Crude Basket. In case of nomination fields by ONGC and OIL, the gas price subject to floor and ceiling price. 20% premium for the gas price is allowed for the gas produced from new wells and well intervention in the nomination fields of ONGC & OIL.

To boost gas production, especially from the Krishna Godavari (KG) Basin, and meet rising domestic gas demand, the Government has taken various initiatives which inter alia include:

- i. Addition  of  new  fields  in  KG-DWN-98/2  block  and  approval  for  high  end  Ocean Bottom Node (OBN) survey of KG-DWN-98/2 block.
- ii. Drilling additional wells in D-34 and Satellite fields in KG-DWN-98/3 block.

(d) Government has approved the revised domestic natural gas pricing guidelines in April 2023 for  gas  produced  from  nomination  fields  of  ONGC/OIL,  New Exploration  Licensing  Policy (NELP) blocks and pre-NELP blocks, where Production Sharing Contract (PSC) provides for Government's approval of prices. The price of such natural gas is 10% of the monthly average of Indian Crude Basket and is notified on a monthly basis. For the gas produced by ONGC & OIL from their nomination blocks, the Administered Price Mechanism (APM) price is subject to a floor and a ceiling which is $4 per million metric british thermal unit (mmbtu) and $6.5 per  mmbtu currently.  Gas produced from new wells or well interventions in the nomination fields of ONGC & OIL, is allowed a premium of 20% over the APM price.

(e) Through Open Acreages Licensing Policy (OALP) biddings, the Government is expanding and accelerating  the  pace  of  exploration  across  sedimentary  basins  of  India.  Till  date  eight OALP  bid  rounds  have  concluded  and  144  exploration  blocks  have  been  awarded  for Exploration & Production (E&P) activities with a total anticipated investment of 3.37 billion USD. In OALP Bid Round-IX, 28 Blocks spreading over an area of 1,36,596 Sq.km have been offered. The Government has brought reforms/ amendments to enhance the participation in bid rounds by addressing the difficulties faced by the existing operators in the existing contractual framework and to make them compatible with the needs of global E&P players so that the bid documents can be made globally competitive.

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