India's Hydrocarbon Outlook – 2022-2023

140 DGH: 3 DECADES OF UNLOCKING INDIA'S HYDROCARBON POTENTIAL Introduction The former policy regime for the exploration and production of oil and gas, known as the New Exploration Licensing Policy (NELP), had been in effect since 1999. The Production Sharing Contracts (PSCs) under NELP were based on the principle of "profit sharing", which required the government to exercise micro-management to control costs and maximize revenue. However, a host of operational issues emerged while administering these contracts under NELP, leading to disputes and arbitrations with the awardee contractors. These issues included the cost recovery limit, procurement issues, the methodology for calculating investment multiples, and the lack of incentives for operators to keep costs low, which had a negative impact on profit petroleum. Additionally, separate policies and fiscal terms were formulated to administer the exploration and production of different types of hydrocarbons, such as CBM, shale oil/gas, and conventional hydrocarbons. This fragmented policy framework resulted in inefficiencies in exploiting natural resources. Under NELP, exploration was restricted to blocks offered by the government, which limited access to lucrative opportunities in other untapped areas. To address these structural and functional issues, the government introduced a Revenue Sharing Contact Regime, which included several ground-breaking changes in policy. 6.1 Discovered Small Field Policy, 2015: India's Bold Move to Unlock Small Oil Fields The Indian Government had introduced a new policy, referred to as the Discovered Small Field (DSF) Policy, 2015, to facilitate the development of small oil fields. This policy offers better fiscal terms, including the exemption of oil cess on crude oil production, moderate royalty New Investment Opportunities in E&P Business 6