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Union Cabinet approves incentives for Oil & Gas recovery

​​The govt will charge half of the Rs 4,500 per tonne cess levied on oil produced from nominated fields of state-owned ONGC and Rajasthan block of private sector Vedanta Ltd through EOR and IOR projects.

ET Bureau|
Updated: Sep 12, 2018, 10.52 PM IST
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The cabinet has approved fiscal incentives, including lower cess and royalty, for enhanced oil and gas recovery from ageing fields as well as new sources such as shale, hydrates and heavy oil.

The move can raise the production of oil by 120 million tonnes and gas by 52 billion cubic metres over the next 20 years, and attract big investments and cutting-edge technology into the sector.

The new policy will be benefit all fields whether they were given to state firms without competition or operated by private parties after an auction, a government statement said on Wednesday.

“Enhanced recovery, improved recovery and exploration and exploitation of unconventional hydrocarbons (shale, hydrates and heavy oil) are capital intensive, technologically complex and challenging in nature. It calls for supporting infrastructure, logistic support, fiscal incentives and enabling environment,” it said.

Sudhir Mathur, CEO at Cairn Oil & Gas, Vedanta Ltd, said the policy would accelerate the growth of the Indian oil and gas industry. “This policy will attract much-needed investments, and usher in a wave of best-in-class technologies to improve India’s hydrocarbons recovery,” he said.

Under the new policy, every field will be assessed for its potential for enhanced recovery, the technology required and the fiscal incentives needed to make it viable.

A panel comprising officials from the oil ministry and the directorate general of hydrocarbons along with experts will monitor and implement the policy.

“Mandatory screening of fields through designated institutions, to be notified by government, and conducting pilot before actual implementation of ER (enhanced recovery) project on commercial level, are other prominent features of the policy,” the government statement said.

The policy provides fiscal incentives for 10 years from the date of commencement of production in enhanced recovery and unconventional hydrocarbons projects.
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