DGH cuts time from discovery to production; eases rules

New Delhi: India’s upstream oil regulator DGH has pruned processes and procedures to allow oil and gas finds to be put into production soon after they are discovered. Issuing guidelines for early monetization of hydrocarbon discoveries, the Directorate General of Hydrocarbons (DGH) said companies can straight away start commercial production from any oil and gas discovery without having to complete time-consuming paperwork.

Timelines provided in contracts oil and gas companies sign with the government are the maximum time allowed for development and monetization of discoveries.”There are no restrictions on the monetization of discovery at an early stage within these timelines; rather it would be in the public interest that discovery is monetized early as a step towards energy security of the country,” DGH said.

It allowed companies to develop and monetize early-stage discoveries before completion of the appraisal, declaration of commerciality (DoC), and submission of the development plan.This essentially means that once a company hits oil and gas finds, it can straight away starting producing and selling it.

Previously, companies were required to file documents to prove the find is commercially viable after appraisal of any discovery. They were also required to submit an investment plan and seek a nod for the production profile.

DGH said companies can upon making a discovery submit to it a development plan (referred to as Early Development Plan), along with relevant details including estimated cost and production profile, and request for granting Petroleum Mining Lease (PML).

“The production ensuing from such discoveries shall be considered as commercial production and payment of statutory levies, cost recovery, sharing of profit petroleum, revenue sharing, etc, as the case shall be as per provisions of respective production sharing contract (PSC)/revenue sharing contract (RSC) and other extant rules/regulations/guidelines,” it said.

DGH said all other terms and conditions will be as per applicable PSC/RSC provisions and other extant guidelines.