Tax break to unlock oil, gas worth Rs 50 lakh crore; boost for ONGC, Cairn

Tax break to unlock oil, gas worth Rs 50 lakh crore; boost for ONGC, Cairn

News:

1. The cabinet approved fiscal incentives to unlock oil and gas by attracting investments and technology to raise the output of ageing oil fields.

Important Facts:

2.  Fiscal incentives worth Rs 50 lakh crore over the next 20 years will be provided by government to enhance oil and gas recovery.
3. Incentives will include lowering cess by half and 75% discount on royalty.
4. Enhanced oil and gas recovery will be obtained from ageing fields as well as new sources such as shale, hydrates and heavy oil.
5. Under the new policy, every field will be assessed for its potential for enhanced recovery, the technology required and the fiscal incentives needed to make it viable.
6. The policy will benefit both the state firms and private parties.
7. Policy also provides mandatory screening of fields through designated institutions, to be notified by government.
8. Pilot studies will also be conducted before actual implementation of enhanced recovery project on commercial level.
9. Implications of the move:

• The move can raise the production of oil by 120 million tonnes and gas by 52 billion cubic metres over the next 20 years.
• Attract big investments and cutting-edge technology into the sector to improve India’s hydrocarbons recovery.

10. Challenges for Enhanced Recovery (ER)

• ER is capital intensive, technologically complex and calls for supporting infrastructure, logistic support, fiscal incentives and enabling environment.