Through this short post, we seek to examine the current downtrend in oil prices, and what it means from an Indian context. As in any downtrend, the intent ought to be to maximise opportunities and isolate effects of any threats and the author accordingly seeks to analyse how these threats may be turned into opportunities. This short piece further examines how, despite the usual market rhetoric, India could position itself to take advantage of the current downturn.

 Global Response

In the wake of the downtrend, the immediate response of global exploration and production (E&P) companies was to hold off large capital investments in new projects and capital-intensive exploration activities. These decisions now stand vindicated as barrel prices have hovered around the US$45-50 mark. Several of the big companies made retrenchments and streamlined costs across the supply chain. Continue Reading Opportunities for India in Current Downtrend of Oil Prices

The regulatory regime governing the exploration and production of hydrocarbons in India is a complex one that has undergone a plethora of change in recent times. This post examines the many developments as well as the past discourse that has set the context for change. .

Brief Background of the Regulatory Regime Governing the Hydrocarbon Sector

In post-1991 India, regulatory reforms in the hydrocarbon sector were implemented through a royalty-cost recovery regime initially under a set of Production Sharing Contracts (PSCs) (Pre-NELP PSCs) and thereafter under the New Exploration Licensing Policy (NELP). Both regimes presented challenges for contractors as well as the Government. Cost recovery meant that the contractor would spend money upfront to explore and recover the same from the revenue generated from the block, then sharing any balance revenue, i.e. “profit”, with the Government.

Continue Reading The Search for Hydrocarbons – A Regulatory Conundrum