HELP to Boost Indian Exploration, Production Sector

HELP to Boost Indian Exploration, Production Sector
Investments and technology are likely to rank high as the Indian Government introduces the country's new Hydrocarbon Exploration and Licensing Production (HELP) policy.

“I never quantify the investment for these fields. [But] I am expecting a huge capital investment in Indian hydrocarbon sector,” he said in response to reports that India needs $40 billion investment for the oil and gas sector.

To boost investment, Pradhan has invited international investors including Saudi Aramco, Royal Dutch Shell plc, BP plc, Chevron Corp. and others, to participate in the development and industrializing of India’s energy sector.

“We expect a sizeable investment. There is a kind of enthusiasm we have seen in these discovered small fields. A good number of companies have taken our data from out data rooms,” he said of the data centers set up at Noida in India, Calgary, Houston and London.

Challenges Ahead

While generating investors’ interests in India’s E&P sector remains a key priority, Pradhan acknowledged the challenge of operating in local basins, particularly those arising from inadequate data.

“But we are now focusing on that National Data Repository,” he said, referring to ongoing efforts in building a data bank.

“We are planning for 3D seismic service and appraisal of unappraised areas,” the Minister added.

Supporting the minister’s latest initiatives, Vikram Mehta, executive chairman of Brookings India, highlighted the 100 percent Foreign Direct Investment being allowed in India’s E&P sector.

“I believe the significant changes that have been made reflect a purposeful and determined leadership to create a competitive and business-friendly operating and commercial environment for E&P,” Mehta, a former Shell chairman in India, said.

“What is markedly evident to me about the evolution of the current policy on DSF – there is a singularity and the alignment of purpose of the political, civilian and technical leadership to reinvigorate E&P and to enhance production of oil and gas in our country,” Mehta added.

The tax/royalty regime under HELP is a big improvement on the previous NELP, as it largely removes the government from businesses and will avoid disputes over cost recovery issues, according to Kevin Robinson, vice president for Asia at Malaysia’s SapuraKencana Energy.

“A biddable royalty system will mean that the market place will decide the government net take. This will help marginal projects get developed, while on better projects the government will get a higher net take due to competition,” he told Rigzone.

“Market pricing on oil and gas will also help the industry, particularly for gas and may see smaller gas discoveries get developed. Subsidized gas pricing has held developments back over the last 10 years,” he explained.

But HELP will mainly affect future exploration rounds, Robinson observed.

“For the marginal discoveries many will be too small to be developed and will be uneconomic under any terms until prices recover,” he said.

Investors are likely to be small- to medium-size companies, start-up firms, Indian service companies and other industries looking to get into the oil business, Robinson added.


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