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Tax break to unlock oil, gas worth Rs 50 lakh crore; boost for ONGC, Cairn
News:
- 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:
- Fiscal incentives worth Rs 50 lakh crore over the next 20 years will be provided by government to enhance oil and gas recovery.
- Incentives will include lowering cess by half and 75% discount on royalty.
- Enhanced oil and gas recovery will be obtained from ageing fields as well as new sources such as shale, hydrates and heavy oil.
- 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.
- The policy will benefit both the state firms and private parties.
- Policy also provides mandatory screening of fields through designated institutions, to be notified by government.
- Pilot studies will also be conducted before actual implementation of enhanced recovery project on commercial level.
- 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.
- Challenges for Enhanced Recovery (ER)
- ER is capital intensive, technologically complex and calls for supporting infrastructure, logistic support, fiscal incentives and enabling environment.
