Shares of five oil and gas exploration companies rose by 0.06% to 1.24% at 10:00 IST on BSE after the government approved major policy initiatives to give a boost to petroleum and hydrocarbon sector.
The government made the announcement after market hours yesterday, 10 March 2016.Meanwhile, the BSE Sensex was up 120.05 points, or 0.49%, to 24,743.39.
ONGC (up 0.53%), Oil India (up 0.71%), GAIL (India) (up 0.06%), Reliance Industries (RIL) (up 1.24%) and Cairn India (up 1.14%) gained.
In a major policy drive to give a boost to petroleum and hydrocarbon sector, the Government has unveiled a series of initiatives yesterday, 10 March 2016. The Union Cabinet and the Cabinet Committee on Economic Affairs in its meeting yesterday, 10 March 2016 gave its approval for Hydrocarbon Exploration Licensing Policy, HELP, an innovative policy for future which provides for a uniform licensing system to cover all hydrocarbons such as oil, gas, coal bed methane etc. under a single licensing framework. There will be marketing and pricing freedom for new gas production from deepwater, ultra deepwater and high pressure-high temperature areas. Policy is also approved for grant of extension to the Production Sharing Contracts for small, medium sized and discovered fields. The government has also cancelled the Ratna offshore field award from Essar Oil and assigned it to the original licensee, ONGC.
The new policy regime marks a generational shift and modernization of the oil and gas exploration policy. It is expected to stimulate new exploration activity for oil, gas and other hydrocarbons and eventually reduce import dependence. It is also expected to create substantial new job opportunities in the petroleum sector. The introduction of the concept of revenue sharing is a major step in the direction of minimum government maximum governance, as it will not be necessary for the Government to verify the costs incurred by the contractor. Marketing and pricing freedom will further simplify the process. These will remove the discretion in the hands of the Government, reduce disputes, avoid opportunities for corruption, reduce administrative delays and thus stimulate growth.
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