Year End Review -2019 of Ministry of Petroleum and Natural Gas

Mains Paper 3 : Economy
Prelims level : Not much
Mains level : Highlights of the Ministry of Petroleum and Natural Gas initiatives

Context

• The Ministry of Petroleum & Natural Gas is concerned with exploration and production of Oil & Natural Gas, refining, distribution and marketing, import, export and conservation of petroleum products.
• Oil and Gas being the important import for our economy, many initiatives have been taken by the Ministry for increasing production and exploitation of all domestic petroleum resources to address the priorities like Energy Access, Energy Efficiency, Energy Sustainability and Energy Security.

Pradhan Mantri Ujjwala Yojana (PMUY):

• With the objective to provide clean cooking fuel to poor households, especially in rural areas ensuring universal coverage of LPG as cooking gas in the country, the Government launched Pradhan Mantri Ujjwala Yojana (PMUY) in May 2016, with an initial target of 5 crore.
• It was further revised to providing 8 crore connections to an adult woman of poor households by March, 2020, which has already been achieved on 7th September, 2019 i.e. 7 months ahead of the target.
• Implementation of this scheme enhanced economic productivity and quality of life of women, by removing drudgery associated with collection of wood. The free time, thus, available with them, can be utilized in multi spheres for improving their life standards.

PAHAL:

• The Government, as a measure of Good Governance, has introduced well targeted system of subsidy delivery to LPG consumers through PAHAL. The initiative of the Government was aimed at rationalizing subsidies, based on approach to cut subsidy leakages, but not subsidies themselves.
• PAHAL Scheme was launched on 15th November 2014, initially in 54 districts. It was subsequently extended to rest of the country from 01.01.2015 for providing the direct benefits transfer of LPG subsidy to the bank account of the LPG consumers.
• As on 13th December 2019, 25.84 crore LPG consumers have joined the PAHAL Scheme and Rs. 1,22,666.82 crore have directly been transferred to the bank accounts of LPG consumers.
• PAHAL Scheme has been designed to ensure that the benefit meant for the genuine domestic customer reaches them directly and is not diverted. The scheme has helped in identifying ‘ghost’ connections, multiple connections and inactive connections which in turn has resulted in curbing diversion of subsidized LPG to commercial purposes.

Reforms in Exploration and Licensing Policy:

• The Government notified ‘Reforms in Exploration and Licensing Policy, for enhancing domestic exploration and production of oil and gas’ on 28th February 2019, with the objective to intensify exploration activities, attract foreign and domestic investment and enhance domestic production. The salient features of Policy Reforms are as under:
• Shifting of focus from ‘revenue’ to ‘production maximisation’.
• No Revenue Sharing with Government in Category- II & III sedimentary basins.
• Boost to exploration activities by assigning greater weightage to exploration work programme.
• For unexplored areas in Category I basins, 70% weightage to Minimum Work Programme and 30% weightage to Revenue Sharing with a cap of 50% at Highest Revenue Sharing point (HRP); and
• For Category II and III sedimentary basins, 100% weightage for Minimum Work Programme.
• Shorter exploration period for early development.
• Fiscal concessions for early monetization and commercial production.
• Marketing and Pricing freedom for natural gas.
• The policy envisages bidding out of 66 small and marginal producing nomination fields operated by National Oil Companies (NOCs) to have collaboration with private E&P players for inducting new and innovative technology, infusing fresh investment and best management practices to enhance production of oil and gas by adopting Enhanced Oil Recovery/Improved Oil Recovery (EOR/IOR) methods.
• NIO for bidding out 66 fields has been issued by ONGC and OIL in the last week of June 2019.
• The MoU of ONGC and OIL were restructured with 50% weightage for physical production, Other physical parameters 30%, Financial performance parameters 20%.
• Redefining the Role of DGH by delegation of additional powers and functions to DGH to strengthen the compliance/regulatory, developmental and coordination role of DGH.
• Simplified and investor friendly Model Bid documents, including increasing of bidding cycle frequency from twice to thrice in a year.

Promoting Ease of Doing Business:

• Simplified contractual terms with emphasis on cutting down approvals of Government/DGH/Management Committee and expeditious grant of approvals.
• Setting up of Empowered Coordination Committee (ECC) under the chairmanship of Cabinet Secretary for expediting process of approvals.
• New Dispute Resolution Mechanism for amicable and speedy redressal of contractual dispute.
• Electronic Single Window mechanism based on IT workflow and processes for processing of approvals. Standard Operating procedures (SoPs) for grant of approvals under PSC have also been finalized.
• OPEN ACREAGE LICENSING POLICY (OALP) BIDDING ROUNDS: During the year 2019, 32 blocks covering approximately 59,000 sq.km area have been awarded under OALP bid Rounds II and III and 7 Blocks with an area of approximately 18500 sq.km have been awarded under OALP Bid Round-IV.
• PETROLEUM EXPLORATION LICENSES: Central Government has already granted Petroleum Exploration Licenses (PELs) for all the offshore blocks and also recommended to all the concerned State Governments to grant PELs for all on-land blocks allocated under Hydrocarbon Exploration and Licensing Policy (HELP) regime.
• NATIONAL SEISMIC PROGRAMME: As on 30.11.2019, surface coverage of 41,902 Line Kilo Meter (LKM), out of 48,143 LKM has been achieved under NSP.
• NATIONAL DATA REPOSITORY (NDR): The NDR was established by the Government to assimilate, preserve and upkeep the vast amount of data which could be organized and regulated for use in future exploration and development, besides use by R&D and other educational institutions. The operation of NDR was formally launched on 28th June, 2017 in DGH Office, Noida. Total data uploaded in NDR till 30 November, 2019 is 2.30 million line kilometres of 2D Seismic Data, 0.78 million square kilometres of 3D Seismic data and 17588 exploratory wells. The data availability in NDR will help investors to carve out blocks for submission of expression of interest under OALP.
• MONETIZATION OF NEW EXPLORATION LICENSING POLICY (NELP) DISCOVERIES: 42 (cumulative) NELP discoveries were monetized as on 31st October, 2019.
• REFINERY: Out of the 23 refineries operating in the country, 18 are in public sector, 3 are in private sector and 2 as a joint venture, with a total refining capacity of 249.366 MMTPA. Out of the refining capacity of 249.366MMT, 142.066 MMT is in the public sector, 19.10 MMT in joint venture and the balance 88.20 MMT is in the private sector. The country is not only self-sufficient in the refining capacity for its domestic consumption, but also exports a sufficient quantity of petroleum products.

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Prelims Questions:

Q.1) With reference to the Interconnect usage charge (IUC), consider the following statements:
1. These charges are paid by a telecom services provider whose subscriber makes a call to the service provider whose subscriber receives the call.
2. Currently only calls made via wireless to wireless devices attract IUC in India.

Which of the statements given above are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of the above

Ans: C
Mains Questions:
Q.1) Describe the several initiatives taken by Ministry of Petroleum and Natural Gas to address the priorities like Energy Access, Energy Efficiency, Energy Sustainability and Energy Security.