DISCOVERY TO DELIEVERY

1
DISCOVERY TO DELIEVERY

• RESOURCES MOBILIZATION FOR THE NEXT PHASE OF
  INDIAS UPSTREAM INDUSTRY
• DECEMBER 10 11, 2004

M. Naseem
2
CAN INDIAS FRAMEWORK BE IMPROVED ?

• MOVE FROM PSC TO ROYALTY / TAX REGIME
• LEGISLATION TO REPLACE ELABORATE PSC TERMS

M. Naseem
3
Legislative Framework

• The Oilfield Regulation and Development Act,1948
• The Petroleum and Natural Gas Rules,1959
• The Territorial Waters, Continental Shelf,
  Exclusive Economic Zones Act,1976

M. Naseem
4
Administrative Regulatory Framework

• MOP NG
• Other Ministries
• Directorate General of Hydrocarbon
• National Oil Companies
• State Governments
• Other Bodies

M. Naseem
5
Steps Initiated

• NELP
• Disinvestment
• Privatization-More Players
• Dismantling of APM

M. Naseem
6
MOP NG

• Formulation of National EP Policy
• Planning
• Implementation
• Promotion of Industry
• Balanced Sustainable Development
• Legislation

M. Naseem
7
DGH

• Established through a Government Order
• Regulator/ Facilitator/Adviser
• Management of PSC
• Identification and Promotion of Acreage

M. Naseem
8
NOC

• Strategic Role
• Infrastructure Development ?
• Still licensee in large Number of Areas
• Sharing of Expertise and Information
• Surprisingly! Most Profitable

M. Naseem
9
State Governments

• Economic Rent of the Resource
• Onshore License and Lease
• Land is under their jurisdiction
• Acquisition depends on them
• Law and order is a State Subject
• Role as a Facilitator

M. Naseem
10
Other Factors

• Custom authorities
• Taxation authorities
• Environmental clearances
• Safety, Health and Welfare-Ministry of Labour

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11
Changes Effected

• NELP Regime Brought
• PNG Rules Amended
• Petroleum Tax Guide
• Site Restoration Fund Scheme
• Medel PSC Concretized
• PSC Made Applicable from the Date of Issuance of
  License

M. Naseem
12
NELP Regime

• License and Lease in the name of Contractor
• Private Parties Versus NOC
• Role of State Governments
• No Legislative Activity Since 1976 Except Some
  Amendments

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13
Legislation and PSC

• Upstream Regulatory Board
• Why not a Comprehensive Legislation
• Other Authorities do not feel Bound by a Contract
  
• Can take care of Issues like Land Acquisition

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14
Legislation

• Clarity of Whole Regime-Less Ambiguity
• Streamlining of Permits / Permissions / Approval
  Process
• To the Extent Possible Single Window Clearance
• Different Govt. Authority Feel Bound by Law and
  Not by a Contract to Which They are Not Party

M. Naseem
15
Legislation

• Have Enough Experience From Working of PSC
• Risk Assessment by Investor is Facilitated
• Nationalization/Expropriation
• Enhanced Investor Confidence

M. Naseem
16
Regulator Role and PSC

• Will be Vested With Statutory Authority
• A Cushion Between Central and State GOV.
• Can Act as facilitator/Moderator
• Single Window
• Interaction

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17
Regulator Vested With Statutory Authority

• Tackle Operational Issues
• Feed back to Gov. for Planning and Policy Making
• Safeguarding National Interest
• Promote Competition and avoid Monopoly
• Coordination

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18
Regulator

• Effective Intervener
• Eyes and Ears of Government without Being Part
• Not Judge in its Own Cause
• Dispute Resolution

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19
Problems

• Less Flexible, Difficult to Change-Proper
  Delegation
• States To be Taken in Confidence Fair Share
• Fate of Petroleum Regulatory Board Bill 2002

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20
Conclusion

• Modern Legislation is Overdue
• Portions of PSC dealing with Environment,
  Exchange Control , Dispute Resolution etc can be
  dealt with in the Legislation
• Only Biddable Items and certain other Terms Could
  be kept in PSC.

M. Naseem