Cabinet note on capping subsidy share of upstream oil cos soon

Ministry of Petroleum and Natural Gas will go to the Cabinet soon seeking a minimum USD 65 per barrel price for state oil and gas explorers like ONGC.

The move is expected to help in bringing 70 million tonnes of oil to production.

"We will soon approach Cabinet on the issue of capping the subsidy share of upstream companies," Oil Minister M Veerappa Moily told reporters here today.

Upstream companies (like ONGC and Oil and India) bear disproportionately high subsidy burden. USD 65 is the minimum price that is needed to help bring marginal and deeper fields into production.

Upstream firms pay for a portion of fuel subsidies by giving discounts on crude oil sales to refiners selling diesel and cooking fuel at rates lower than cost of production.

Discoveries in Mumbai High and KG basin on the east coast can produce nearly 70 million tonnes over a period of time if the price is right.

The Kirit Parikh Committee, last year, advocated reducing upstream subsidy burden and Oil Ministry.

The ministry will also circulate a Cabinet note on allowing Reliance Industries extra time to conduct various tests to prove five natural gas discoveries.

"We are going to the Cabinet Committee on Economic Affairs to allow the contractor to conduct DST (drill stem test) after the time period has expired," Moily said here.

The tests should be done to confirm three gas discoveries in the Krishna Godavari basin KG-D6 block and two finds in the NEC-25 block off the West Bengal coast.

Directorate General of Hydrocarbons (DGH) has made DST mandatory and in its absence does not recognise the five finds.

EDITORIAL OF THE DAY

  • Finance minister has been pragmatic in exempting FIIs from MAT claims

    Good sense has finally prevailed in the government, with finance minister Arun Jaitley announcing the income-tax officials will exempt overseas funds

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Amita Sharma

Centre set to scrap 60:40 norm for NITs

A committee set up by the ministry of human resource ...

Zehra Naqvi

If you bend, you won’t break

There’s an ancient exercise about a green, supple new branch ...

Gautam Gupta

Bring on the Benares brigade

It was in 2003 when I first started work and ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture