Oil and gas stocks gain; Cairn surges nearly 5%

Oil and gas stocks today gained as much as 5 per cent after the government in a bid to attract investments in the sector announced a slew of reforms including a new pricing formula for undeveloped gas discoveries in difficult areas.
Shares of Cairn India surged 4.58 per cent, Petronet LNG was up 1.01 per cent, Oil India (0.45 per cent) and Reliance Industries Ltd (0.36 per cent) on BSE.
The BSE oil and gas index too rose by 0.50 per cent to end at 8,746.37.
"The ease of doing business in oil and gas sector by giving companies pricing freedom will go a long way in exploitation of the domestic reserves. Many oil exploration and extraction ancillaries too will benefit from the move as lot of incremental demand from the marginal fields will also emerge," said Jimeet Modi, CEO, SAMCO Securities.

In a bid to attract investments in oil and gas sector, the government yesterday announced a new pricing formula for undeveloped gas discoveries in difficult areas that would result in 85 per cent jump in rates and help monetise Rs 1.80 lakh crore of inert finds.
While giving nod to pricing freedom subject to a cap for gas produced from High Pressure High Temperature, deepwater and ultra deepsea areas, the Cabinet also approved replacing the controversial Production Sharing Contract (PSC) with simpler revenue-sharing regime for all future field auctions.