KOLKATA (miningweekly.com) – The Indian government is likely to permit existing oil and gas field operators to undertake new exploration projects within their existing licensing area even as it goes ahead to woo new investors through auction of 55 discovered oil and gas fields.

In a leeway to be offered by the Directorate of Hydrocarbons, existing oil and gas field operators would be permitted to undertake exploration projects in their existing licensing area and allowed to defray costs of such projects from current revenues if the exploration fails to establish new recoverable reserves, official familiar with the development said.

They said that the proposal to offer flexibility to existing operators had been hanging fire for the last three to four years, as the government was apprehensive to receiving lower share of revenues if operators were permitted to defray exploration costs from their existing revenue streams.

The new incentive was expected to be a boon for operators like Reliance Industries and Cairns India, which had been seeking such leeway in taking up exploration projects in their respective licensing areas.

Private exploration and production majors have been moving the government pointing out that exploration was a continuous process alongside production from existing wells and that the current restrictive policy on exploration violated the basic principle of granting licensing, as the latter was for the entire area and not specific to operational wells, the officials added.

The officials said that, at a time when the government was pushing for increase of exploration of new resources across the country, an exploration and production company could not be expected to bear the full cost of exploration in their existing fields and at the same time ensure zero impact of current revenue streams and share of the government from it.