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Union Cabinet Nods to the new Hydrocarbon Exploration and Licensing Policy

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The Union Cabinet, presided by Prime Minister Narendra Modi approved the Hydrocarbon Exploration and Licensing Policy (HELP).

Flash Points

  • The HELP will replace the New Exploration Licensing Policy (NELP)
  • It will enhance domestic oil and gas production, bring substantial investment in the sector and generate sizable employment. The policy also targets the enhancement of transparency and reduction of administrative discretionHydrocarbon Exploration and Licensing Policy
  • It will provide Uniform license for exploration and production of all forms of hydrocarbon including CBM, shale gas/oil, tight gas and gas hydrates under a single license
  • The concept of Open Acreage Policy will enable Exploration & Production (E&P) companies choose the blocks from the designated area
  • The earlier contracts were based on the concept of profit sharing where profits are shared between Government and the contractor after recovery of cost
  • Under the new regime, the Government will not be concerned with the cost incurred and will receive a share of the gross revenue from the sale of oil, gas etc
  • A graded system of royalty rates have been introduced, in which royalty rates decreases from shallow water to deepwater and ultra-deep water.
  • The royalty rate for onland areas have been kept intact so that revenues to the state governments are not affected
  • Cess and import duty will not be applicable on blocks awarded under the new policy.
  • The policy also provides for marketing freedom for crude oil and natural gas produced from these blocks