Glossary | Directorate General of Hydrocarbons (DGH)


Commonly used E&P terms in Indian Scenario :.

Appraisal Programme :

A Programme, carried out following a Discovery in the Contract Area for the purpose of appraising Discovery and delineating the Petroleum Reservoirs to which the Discovery relates in terms of thickness and lateral extent and determining the characteristics and the quantity of recoverable Petroleum within.
Appraisal Well :

A Well drilled pursuant to an Appraisal Programme.
Approved Work Programme :

A Work Programme that has been approved by the Management Committee pursuant to the provisions of this Contract.
Arms Length Sales :

Sales made freely in the open market, in freely convertible currencies, between willing and unrelated sellers and buyers and in which such buyers and sellers have no contractual or other relationship, directly or indirectly, or any common or joint interest as is reasonably likely to influence selling prices and shall, inter alia, exclude sales (whether direct or indirect, through brokers or otherwise) involving Affiliates, sales between Companies which are Parties to this Contract, sales between governments and government-owned entities, counter trades, restricted or distress sales, sales involving barter arrangements and generally any transactions motivated in whole or in part by considerations other than normal commercial practices.
Associated Natural Gas :

Associated Natural Gas or “ANG” means Natural Gas produced in association with Crude Oil either as free gas or in solution, if such Crude Oil can by itself be commercially produced.
Barrel :

A quantity or unit equal to 158.9074 litres (forty two (42) United States gallons) liquid measure, at a temperature of sixty (60) degrees Fahrenheit (15.56 degrees Celsius) and under one atmosphere pressure (14.70 psia).
Basement :

Any igneous or metamorphic rock, or rocks or any stratum of such nature, in and below which the geological structure or physical characteristics of the rock sequence do not have the properties necessary for the accumulation of Petroleum in commercial quantities and which reflects the maximum depth at which any such accumulation can be reasonably expected in accordance with the knowledge generally accepted in the international petroleum industry.
Commercial Discovery:

A Discovery of Petroleum reserves.

Commercial Production:

The production of Crude Oil or Condensate or Natural Gas or any combination of these from the Contract Area (excluding production for testing purposes) and delivery of the same at the relevant Delivery Point under a programme of regular production and sale.


Condensate means those low vapour pressure hydrocarbons obtained from Natural Gas through condensation or extraction and refers solely to those hydrocarbons that are liquid at normal surface temperature and pressure conditions provided that in the event Condensate is produced from a Development Area and is segregated at the Delivery Point or transported to the Delivery Point after segregation, then the provisions of this Contract shall apply to such Condensate as if it were Crude Oil.

Contract Area:

Contract Area means, on the Effective Date, the area described in Model Production Sharing Contract(MPSC) and delineated on the map attached or any portion of the said area remaining after relinquishment or surrender from time to time pursuant to the terms of this Contract.

Contract Costs:

Contract Costs means, Exploration Costs, Development Costs and Production Costs as provided in the Model Production Sharing Contract(MPSC).

Contract Year:

A period of twelve (12) consecutive months counted from the Effective Date or from the anniversary of the Effective Date.

Cost Petroleum:

The portion of the total value of Petroleum Produced and Saved from the Contract Area which the Contractor is entitled to take in a particular period, for the recovery of Contract Costs as provided in the Model Production Sharing Contract(MPSC).

Crude Oil:

"Crude Oil" or “Oil” or “Crude” means all kinds of hydrocarbons and bitumen, both in solid and in liquid form, in their natural state or obtained from Natural Gas by condensation or extraction, including distillate and Condensate when commingled with the heavier hydrocarbons and delivered as a blend at the Delivery Point but excluding Natural Gas.

Deepwater Area:

Deepwater Area (for deepwater blocks/areas) means area falling beyond four hundred (400) metre isobath, provided, however, that for the purposes of this Contract, the Contract Area as on Effective Date, as described in the Model Production Sharing Contract(MPSC).

Delivery Point:

Delivery Point means, except as otherwise provided here or as may be otherwise agreed between the Parties having regard to international practice, the point at which Petroleum reaches the outlet flange of the delivery facility, either offshore or onshore and different Delivery Point(s) may be established for purposes of sales. Delivery Point(s) shall be approved by the Management Committee.

Development Area:

The part of the Contract Area which encompasses one or more Commercial Discovery(ies) and any additional area that may be required for proper development of such Commercial Discovery(ies) and established as such in accordance with the provisions of the Contract.

Development Costs:

Those costs and expenditures incurred in carrying out Development Operations, as classified and defined in the Model Production Sharing Contract(MPSC).

Development Operations:

Operations conducted in accordance with the Development Plan and shall include, but not be limited to the purchase, shipment or storage of equipment and materials used in developing Petroleum accumulations, the drilling, completion and testing of Development Wells, the drilling and completion of Wells for Gas or water injection, the laying of gathering lines, the installation of offshore platforms and installations, the installation of separators, tankages, pumps, artificial lift and other producing and injection facilities required to produce, process and transport Petroleum into main Oil storage or Gas processing facilities, either onshore or offshore, including the laying of pipelines within or outside the Contract Area, storage at Delivery Point(s), the installation of said storage or Gas processing facilities, the installation of export and loading facilities and other facilities required for the development and production of the said Petroleum accumulations and for the delivery of Crude Oil and/or Gas at the Delivery Point and also including incidental operations not specifically referring here but required for the most efficient and economic development and production of the said Petroleum accumulations in accordance with modern oilfield and petroleum industry practices.

Development Plan:

A plan submitted by the Contractor for the development of a Commercial Discovery, which has been approved by the Management Committee or the Government pursuant to the Model Production Sharing Contract(MPSC).

Development Well:

Well means a Well drilled, deepened or completed after the date of approval of the Development Plan pursuant to Development Operations or Production Operations for the purposes of producing Petroleum, increasing production, sustaining production or accelerating extraction of Petroleum including production Wells, injection Wells and dry Wells.


Discovery means the finding, during Petroleum Operations, of a deposit of Petroleum not previously known to have existed, which can be recovered at the surface in a flow measurable by petroleum industry testing methods.

Discovery Area:

That part of the Contract Area about which, based upon Discovery and the results obtained from a Well or Wells drilled in such part, the Contractor is of the opinion that Petroleum exists and is likely to be produced in commercial quantities.

Effective Date:

Effective Date means the later of the date on which this Contract is executed by the Parties or the date of issue of License or date from which License has been made effective by the Central Government or State Government(s) as the case may be.

Environmental Damage:

Environmental Damage means soil erosion, removal of vegetation, destruction of wildlife, pollution of groundwater or surface water, land contamination, air pollution, noise pollution, bush fire, disruption to water supplies to natural drainage or natural flow of rivers or streams, damage to archaeological, palaeontological and cultural sites and shall include any damage or injury to, or destruction of, soil or water in their physical aspects together with vegetation associated therewith, aquatic or terrestrial mammals, fish, avi-fauna or any plant or animal life whether in the sea or in any other water or on, in or under land.

Exploration Costs:

Those costs and expenditures incurred in carrying out Exploration Operations, as classified and defined in the Model Production Sharing Contract(MPSC).

Exploration Operations:

Operations conducted in the Contract Area pursuant to this Contract in searching for Petroleum and in the course of an Appraisal Programme and shall include but not be limited to aerial, geological, geophysical, geochemical, palaeontological, palynological, topographical and seismic surveys, analysis, studies and their interpretation, investigations relating to the subsurface geology including structural test drilling, stratigraphic test drilling, drilling of Exploration Wells and Appraisal Wells and other related activities such as surveying, drill site preparation and all work necessarily connected therewith that is conducted in connection with Petroleum exploration.

Exploration Period:

Exploration Period means the period mentioned in the Model Production Sharing Contract(MPSC) during which Exploration Operations may be carried out by the Contractor as provided in the same.

Initial Exploration Period:

Initial Exploration Period means the first four (4) consecutive Contract Years specified in the Model Production Sharing Contract(MPSC) in which the Contractor is required to complete the Minimum Work Programme specified there.

Subsequent Exploration Period:

Subsequent Exploration Period means three (3) maximum consecutive Contract Years following the Initial Exploration Period subject to provisions contained in the Model Production Sharing Contract(MPSC).

Exploration Well:

Well drilled for the purpose of searching for undiscovered Petroleum accumulations on any geological entity (be it of structural, stratigraphic, facies or pressure nature) to at least a depth or stratigraphic level specified in the Work Programme.

Foreign Company

Foreign Company means a Company within the meaning as in the Model Production Sharing Contract(MPSC).

Frontier Area

Any area identified, demarcated and so notified by the Government or its authorised agency(ies) for the purpose of exploration and exploitation of Oil and Gas, which is logistically and technically difficult and lacks infrastructural and/or marketing facilities, etc.

Gas Field:

Gas Field means, within the Contract Area, a Natural Gas Reservoir or a group of Natural Gas Reservoirs within a common geological structure or feature.

Investment Multiple:

Investment Multiple means, the ratio of accumulated Net Income to accumulated Investment by the Contractor, as determined in the Model Production Sharing Contract(MPSC) to be rounded off to 3 decimal places.


Lease means a petroleum mining lease referred to in the Rules and shall, unless otherwise stated therein, exclude right for exploration and exploitation of coal/ lignite bed methane (CBM).


Lessee means the Contractor to whom a Lease is issued under the Rules for the purpose of carrying out Petroleum Operations in a Development Area or Contract Area.


LIBOR means the London Inter-Bank Offer Rate for six-month maturates of United States Dollars as quoted by the International Swaps and Derivative Association or such other bank being a BBA LIBOR contributor panel bank as the Parties may agree.

Minimum Work Programme:

Minimum Work Programme means with respect to Initial Exploration Period, the Work Programme specified in the Model Production Sharing Contract(MPSC).

Mandatory Work Programme:

Mandatory Work Programme means the Work Programme specified in the Model Production Sharing Contract(MPSC). with respect to Initial Exploration Period.

Non Associated Natural Gas:

Non Associated Natural Gas "NANG" means Natural Gas which is produced either without association of Crude Oil or in association with such quantities of Crude Oil which by itself cannot be commercially produced.

Oil Field:

Oil Field means, within the Contract Area, an Oil Reservoir or a group of Oil Reservoirs within a common geological structure or feature.


Operator means one of the Parties comprising the Contractor, appointed as the Operator pursuant to the Model Production Sharing Contract(MPSC).

Operating Agreement

Operating Agreement means the joint operating agreement entered by the constituents of the Contractor in accordance with the Model Production Sharing Contract(MPSC), with respect to conduct of Petroleum Operations.

Operating Committee:

The Committee established by that name in the Operating Agreement pursuant to the Model Production Sharing Contract(MPSC).

Participating Interest:

Participating Interest means, in respect of each Party constituting the Contractor, the undivided share expressed as a percentage of such Party’s participation in the rights and obligations under this Contract.

Petroleum Produced and Saved:

Petroleum Produced and Saved means gross Petroleum produced minus impurities such as water or solids produced along with Petroleum, Petroleum recycled to the reservoir, Petroleum used in Petroleum Operations or flared or otherwise unavoidably lost under the provisions of the Contract.

Production Costs:

Production Costs means those costs and expenditures incurred in carrying out Production Operations as classified and defined in the Model Production Sharing Contract(MPSC).

Production Operations:

All operations conducted for the purpose of producing Petroleum from the Development Area after the commencement of production from the Development Area including the operation and maintenance of all necessary facilities therefor.

Profit Petroleum:

Profit Petroleum means, the total value of Petroleum Produced and Saved from the Contract Area in a particular period, as reduced by Cost Petroleum and calculated as provided in the Model Production Sharing Contract(MPSC).


Recompletion means an operation whereby a completion in one zone is abandoned in order to attempt a completion in a different zone within an existing Well bore.


Reservoir means a naturally occurring discrete accumulation of Petroleum.

Site Restoration:

All activities required to return a site to its state as of the Effective Date pursuant to the Contractor’s environmental impact study and approved by the Government or to render a site compatible with its intended after-use (to the extent reasonable) after cessation of Petroleum Operations in relation thereto and shall include, where appropriate, proper abandonment of Wells or other facilities, removal of equipment, structures and debris, establishment of compatible contours and drainage, replacement of top soil, re-vegetation, slope stabilisation, in-filling of excavations or any other appropriate actions in the circumstances.