Oilfield contractors may get 35-yr lease | Economic Times

New Delhi: The government is planning to give oilfield contractors a longer consolidated lease for 35 years, which would help cut bureaucratic delays in obtaining multiple leases and aid contractors in planning long-term investments. The oil ministry is seeking to amend the Oilfields Regulation & Development Act, 1948 to permit such long-term leases to winners of exploration licences, as per people familiar with the matter. The current rules permit grant of petroleum exploration licence (PEL) for seven years in on land and shallow water areas and for eight years in deepwater and frontier areas. After the discovery is made and the contractor seeks to carry out production of hydrocarbon, it must seek petroleum mining lease (PML), which is awarded for 20 years. In case of offshore blocks, the Centre grants PEL and PML while in case of onland blocks, state governments do so at the recommendation of the Centre. The oil ministry is now planning to merge the two leases into one, which will be granted to licensees at the beginning of the exploration period. The lease will last 35 years. “Companies can save time, avoid bureaucratic hassles and get a long-term certainty, which will help them better plan their investments for the fields,” said a person familiar with the matter. 80261603The ministry also wants the proposed policy changes to apply to running contracts, which would mean an easy renewal of contracts, he said. Private companies planning to explore shale gas in their existing coal bed methane (CBM) blocks have been demanding the government allow an extended contract term of 35 years. Great Eastern Energy Corporation and Essar Oil and Gas Exploration and Production have been keen on exploiting shale resources in their CBM fields after a policy change in 2018 permitted them to explore all forms of unconventional hydrocarbons in existing contract areas.