REGULATORY & JUDICIAL DEVELOPMENT – INDIA
Hydrocarbon Exploration and Licensing Policy (HELP)
The Union Cabinet approved the Hydrocarbon Exploration and Licensing Policy (HELP), introducing a uniform licensing framework for exploration and production of all forms of hydrocarbons.
Key features of the policy include:
- Uniform licence for all hydrocarbon resources
- Open acreage policy
- Revenue sharing model
- Marketing and pricing freedom for crude oil and natural gas
- Enhanced transparency and reduced administrative discretion
The policy enables exploration of conventional and unconventional resources including CBM, shale gas, tight gas and gas hydrates under a single licence framework.
New Price Formula for Undeveloped Gas Discoveries Approved
March 10, 2016
The Cabinet Committee on Economic Affairs approved a revised pricing formula for undeveloped gas discoveries in difficult areas.
The new mechanism links gas prices to alternative fuels such as fuel oil, naphtha, imported coal and LNG, resulting in significantly improved commercial viability for deep-water gas projects.
FEATURE
Shortfall Gas Under Gas Sales Agreement (GSA)
Shortfall gas refers to the quantity of gas that a seller fails to deliver against a properly nominated quantity under a Gas Sales Agreement, excluding circumstances such as force majeure or buyer default.
A well-drafted GSA should clearly define:
- Shortfall gas thresholds and tolerances
- Seller liability limitations
- Buyer remedies and compensation mechanisms
- Audit and monitoring rights
- Expert determination procedures for disputes
Sellers often seek tolerance limits for minor delivery failures, while buyers generally prefer stricter obligations to ensure uninterrupted supply.
Remedies for shortfall gas may include:
- Cash compensation
- Discounted replacement gas
- Reimbursement of alternative fuel costs
- Shortfall gas pricing adjustments
- Liquidated damages mechanisms
The article emphasizes the importance of clear contractual provisions and operational transparency to minimize disputes relating to shortfall gas deliveries.
Under a Gas Sales Agreement, the seller is generally required to take all reasonable measures to avoid and remedy shortfall gas situations while maintaining the standards of a prudent operator.
STOP PRESS
British Petroleum Oil Spill Settlement
April 4, 2016
The Deepwater Horizon oil spill, which began on April 20, 2010 in the Gulf of Mexico, remains one of the largest marine oil spill disasters in history.
The incident resulted in:
- 11 worker fatalities
- Approximately 4.9 million barrels of oil released
- Multiple government investigations
- Criminal and civil penalties against British Petroleum
In April 2016, a U.S. Federal Judge approved an estimated USD 20 billion settlement payable over sixteen years. The settlement covered environmental damages, Clean Water Act penalties, and claims by Gulf Coast states.
Revised Crude Oil Import Policy for Oil PSUs
April 6, 2016
The Union Cabinet approved a revised Crude Oil Import Policy granting Oil Public Sector Undertakings greater autonomy in developing procurement policies.
The move aims to:
- Increase operational flexibility
- Improve procurement efficiency
- Align with current market conditions
- Promote the principle of Minimum Government, Maximum Governance
The revised framework replaces provisions of the earlier policy introduced in 1979 and amended in 2001.
When natural gas is cooled to approximately −162°C (−260°F), it changes from a gas into a liquid.
NEXT ISSUE
August 2016
IN-HOUSE CONTRIBUTORS
- Sakshi Bawa – Oil & Gas Team (Downstream)
- Neha – Oil & Gas Team (Upstream)
SOURCES
- Norwegian Petroleum Directorate
- U.S. Energy Information Administration
- The International Energy Agency
- Organisation of the Petroleum Exporting Countries
- The Oil and Gas Journal
- Official Websites of Various Oil & Gas Companies
- Peter Roberts, Gas Sales and Gas Transportation Agreements: Principles and Practice
MARKET DEVELOPMENTS – GLOBAL
ExxonMobil Starts Banyu Urip Processing Facility in Indonesia
December 14, 2015
ExxonMobil successfully started the central processing facility at the Banyu Urip field in Indonesia, increasing production beyond 130,000 barrels per day.
ONGC Invests INR 5,000 Crore in ONGC Videsh
December 22, 2015
The Government approved conversion of ONGC’s existing loan into equity investment in ONGC Videsh, strengthening its overseas exploration and production capabilities.
Shell’s Corrib Gas Field Commences Production
December 30, 2015
Natural gas production commenced from Ireland’s Corrib Gas Field, a significant offshore project expected to contribute substantially to Ireland’s energy requirements.
Shell Exits Bab Sour Gas Development Project
January 18, 2016
Royal Dutch Shell announced its withdrawal from the Bab Sour Gas Reservoir Development Project in Abu Dhabi.
HPCL Receives Environmental Clearance for Vizag Refinery Expansion
January 18, 2016
HPCL secured environmental clearance for its INR 18,400 crore refinery expansion project at Visakhapatnam.
Chevron and ENN Sign Gorgon LNG Agreement
January 18, 2016
Chevron signed a Heads of Agreement with ENN LNG Trading Company for LNG supply from the Gorgon Project in Australia.
DISCLAIMER
The information contained in this private circulation is not legal advice and should not be relied upon as such.
The content is sourced from publicly available information and is intended solely for private and non-commercial purposes.
No representation is made regarding the accuracy, completeness, or reliability of the information provided.
This disclaimer shall be governed by and construed in accordance with the laws of India, and any disputes shall be subject to the exclusive jurisdiction of Indian courts.
Doc ID: 5O&G16
