NEW DELHI (Dow Jones Newswires), Dec. 22, 2011
An Indian parliamentary panel Thursday asked the oil ministry to review its production sharing contracts with various operators and include stringent provisions for any violation of approved plan by explorers.
The recommendations of the Standing Committee on Petroleum and Natural Gas comes in the wake of production missing target at Reliance Industries Ltd.'s (500325.BY) D6 block off the east coast, in part due to drilling of fewer-than-planned wells.
A production sharing contract is an agreement between an explorer and the government under which the explorer bears all exploration risks as well as production and development costs in return for a share of output if it makes a commercial oil or gas find.
There are no specific penalty stipulations in production sharing contracts in case a explorer misses the output target and that gives the contractor an escape route, the panel said.
Copyright (c) 2011 Dow Jones & Company, Inc.
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