Govt reverts back to old system of awarding oil and gas blocks

The government Tuesday approved new rules for bidding out oil and gas blocks as it reverted back to a two-decade old system of awarding areas based on exploration work commitment, granted marketing and pricing freedom to yet to be developed discoveries and allowed ONGC to induct private firms in existing fields.

In a bid to boost flagging domestic production and cut imports, the Cabinet headed by Prime Minister Narendra Modi approved "a transparent, investor-friendly and competitive policy framework to accelerate exploration activities and provide impetus to expeditious production of oil and gas," an official statement said.

The new system of awarding blocks in not so prolific areas will replace a two-year-old method of awarding them to companies offering the highest revenue share to the government.

The Cabinet approved awarding of exploration blocks in Category-I basins, where commercial production of hydrocarbon has already been established, on the basis of a mix of work commitment .