Directorate General of Hydrocarbons overhauls oilfield approval processes, cuts down paperwork

In a major overhaul, DGH has made it easier for firms to explore and produce oil and gas in the country by limiting the requirement of statutory approvals to only extension of contracts, sale of stake and annual accounts while allowing self-certification and deemed approval for the rest.
The Directorate General of Hydrocarbons (DGH), the government's technical arm overseeing upstream oil and gas production, said procedures and processes for oil and gas blocks awarded under nine bids round of New Exploration Licensing Policy (NELP) and pre-NELP blocks are being simplified and standardised.

While state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) produce two-third of India's oil and gas from blocks or areas given to them on a nomination basis, the remaining output is from pre-NELP and NELP blocks.

The pre-NELP blocks include Panna/Mukta and Taoil and gas fields in western offshore and Ravva field in the KG basin.

But the biggest of oil and gas discoveries outside of the nomination acreage have happened in the blocks awarded under NELP since 2000. These include Reliance Industries Ltd's eastern offshore KG-D6 block and NEC-25. ONGC too has significant finds in NELP blocks.

"Ease of doing business is one of the key focus areas of the government in Exploration and Production (E&P) sector with the objective to increase investment and production. Simplification and standardisation of procedures and processes make the system transparent and efficient," DGH said an order dated July 12.

DGH undertook a review of processes of various approvals and submission of documents under Production Sharing Contracts (PSC) for NELP and pre-NELP blocks.

As many as 37 processes and procedures were required to be followed by a firm exploring oil and gas in a block awarded under NELP or pre-NELP rounds. These have now been cut to just 18.

Self-certification has been allowed in half of them, including for declaring a discovery as commercially viable as well as on requirement of submission of quarterly reports, insurance and indemnity and bank guarantees.

No approval will be needed for any of these processes, DGH said.

DGH has allowed deemed approval on expiry of 30 days of submission of self-certified documents on the annual work programme, appraisal and field development plan or its revision.

Prior approval of the block oversight committee, DGH or the Oil Ministry will be required only in cases where extension of the contract or exploration phase is to be granted or the contractor is selling or exiting the block.

End-of-year accounting statement, abandonment plan and cost of unfinished work programme too would need prior approval.

"Thus the 37 erstwhile processes of contract compliance are now covered by 18 processes of contract compliance by merging or subsuming in other processes," DGH said.

Further, submission of all documents will be made online as per the given templates, it added.

India in 2016 migrated to an open acreage licensing regime where companies can choose the area they want to explore rather than the government demarcating it. The new regime provides much easier compliance but the legacy contracts had continued to have a large compliance burden.

The compliance requirement of NELP had also led to controversies such as allegations of gold-plating of the cost and over-estimation of reserves in KG-D6.

Now the processes have been streamlined.

"In order to enhance the ease of doing business, the processes have been further rationalised and limited to processes where documents shall be accepted on self-certification basis and no approval is required - 9; processes where approval will be deemed on expiry of 30 days of submission of self-certification of documents - 3; processes where approvals shall be required under rules or contracts - 6," DGH said.