10 March 2015

Report on Roadmap for Reduction in Import Dependency in the Hydrocarbon Sector released


The central government had constituted aCommittee (Chair: Mr. Vijay Kelkar) to prepare aroadmap for enhancing domestic oil and gasproduction and for sustainable reduction in import
dependency by 2030. The Committee submittedits final report in September 2014.17

Key recommendations of the Committee include:

 Expediting appraisal of Indian basins shouldbe done through: (i) the creation of a National
Data Repository, (ii) the introduction of anOpen Acreage Licensing Policy at the
earliest, (iii) providing operators withflexibility in completion of Minimum Work
Programme, and (iv) giving companies theRight of First Refusal (ROFR) as an incentive
for conducting basin appraisal. ROFR is thecontractual right of a company to enter into a
business transaction before anyone else can,and if they refuse, bidding for the asset can be
opened up to other interested parties.
 Enhancing domestic production of oil and gasby: (i) developing a Production Sharing
Contract model instead of the revenue sharingcontract model and subsequently bringing in
administrative reforms and contract stability,(ii) removing subsidy burden on exploitation
of mature oil fields, and (iv) encouraging coalgasification, which can provide an important
non-conventional source of oil and gas.
 Bringing in institutional reforms by: (i)constituting an empowered cabinet committee
on energy for policy formulation,  (ii)transforming and empowering the Directorate
General of Hydrocarbons to become anindependent regulator, and (iii) undertaking
fiscal reforms such as including oil and gasunder the recently proposed Goods and
Services Tax framework.
 Creating a roadmap for transition to marketdetermined
gas pricing by 2017 or the nextpricing period, by: (i) undertaking both
demand and supply side measures, such asproviding transparent and targeted subsidies,
and encouraging trading of contracts for gason the commodity exchanges in the country,
and (ii) abolishing the gas allocation policy

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