The Cabinet Committee on Economic Affairs (CCEA), on Thursday, approved the award of oil and gas blocks to two consortiums led by GAIL India and Deep Energy, respectively.However, the CCEA, headed

Prime Minister Manmohan Singh on Monday pushed for phased rationalisation of energy prices to bring them in line with international prices to meet the targeted rapid inclusive and sustainable growth.

Energy remained under-priced in the country with coal, petroluem products and natural gas prices remaining well below international prices, he said laying the foundation stone for the Rs 14,225 crore BPCL-Kochi Refinery’s Integrated Refinery Expansion Project at nearby Ambalamugal. “To meet our target of rapid inclusive and sustainable growth, we must undertake a phased rationalistion of engery prices,” Singh said.

In his first major decision, the petroleum minister, M Veerappa Moily, has allowed Reliance Industries and Cairn India to explore oil and gas within producing fields, subject to conditions.

The ministry, which had been sitting on the proposal for over a year, wrote to the directorate general of hydrocarbons (DGH) this week, saying it had decided to permit exploration in producing fields, sources said.

Natural gas prices in the economy are expected to rise as a panel led by the Prime Minister’s Economic Advisory Council chairman C Rangarajan has asked for linking domestic prices to an average of international hub prices and the cost of imported LNG.

The report submitted to Prime Minister Manmohan Singh has also suggested scrapping the cost recovery clause in production sharing contracts (PSCs) the government signs with exploration companies in future. Instead it has suggested the share of the contractor should be determined through a competitive bid process. The recommendation is expected to avoid tussles like that of the oil ministry with Reliance Industries Ltd where the difference in cost recovery formula has almost led to arbitration.

Faces Hurdles In Environment Clearance In Andhra Pradesh

There seems to be no end to the trouble of the state PSU, Gujarat State Petroleum Corporation (GSPC). Under fire from activist-turned-politician Arvind Kejriwal for an alleged scam of Rs 20,000 crores for its offshore gas exploration in KG Basin, off Andhra coast, the premier bluechip company is now facing the ire of the Andhra Pradesh government for failing to take forest and wildlife clearance.

It has asked GSPC executives to “stop work” of laying down a crucial submarine pipeline to take gas from KG Basin to its onshore gas terminal (OGT) via an area which is 10 km of the Corianga sanctuary without necessary clearances. It asks them to explain “why action shouldn’t be taken” for violating forest and wildlife laws.

As against planned gas production of 95.87 mcm, company produced 153.992 mcm

Oil & Natural Gas Corporation Ltd (ONGC) has achieved highest natural gas production from its Gujarat gas fields for the month of November, a statement from the union ministry of petroleum and natural gas (MoPNG) showed. As against the planned monthly natural gas production of 95.87 million cubic meters (mcm), ONGC produced 153.992 mcm of natural gas from its Gujarat assets during November, achieving 160 per cent of the planned production. This is the highest production achieved among other exploration companies in the country for the month.

The oil ministry has approved further exploration in Cairn India's operational oilfields in Rajasthan to increase production.

“The proposal was pending with us for more than one and a half years. According to the existing PSC, the contractors are not prohibited for exploration in producing fields, however, we have given our approvals,” a senior oil ministry official said. "Cost-recovery shall be permitted only after commercial viability of finds are established," the official added. Anil Agarwal earlier wrote a letter to oil minister Veerappa Moily seeking permission to explore remaining potential resources in India's biggest onland oilfield. The company plans to ramp up production from its Rajasthan block to 3,00,000 barrels per day.

The C Rangarajan panel, which is likely to give its report on the licensing of oil and gas fields in a week, is expected to favour production-linked payment for profit-sharing between the government and oil explorers, replacing the existing system of linking it to investments.

Currently, producers can decide whether and how to recover their investments before starting to share profits with the state. “The new contractual provision is being proposed to overcome the difficulties in managing the existing model based on the pre- tax investment multiple methodology and cost recovery mechanism,” the report has said.

The Prime Minister-appointed Rangarajan Committee may this week suggest sweeping changes in future oil and gas contracts by asking explorers to bid for a percentage of output they would share with the government.

Sources said the panel may ask the government to move to a production-linked payment regime where explorers will be required to bid for the government share of production after royalty.