E & P Friendly India

India needs to have a national view on E&P with respect to other priorities to be able to clearly define the way ahead and even the possible exits. The year 2014 started on a high note for the industry but ended on a much reduced scale. The way forward in the industry can be taken up in three different ways:

1. Nationalised Model: PSUs undertake all the future activity.
2. Discover-and-auction Model: The primary focus of the oil companies is data-generation, basin establishment, farming out discoveries to private players with interest and also fees to support exploration.
3. Pure auctions Model: PSUs and private firms all bid on a level ground

It is the last of the three models which can mitigate the capital risk to the private sector and also ensure quick delivery along with latest skills. However, to take it up India will need many more private operators and as many new wells to be drilled. This is possible if the existing players are booming with activity to attract new ones on the deck. In addition, the new entrants will need security of investment and also a reward potential consistent with risk perceptions.  A few steps which can be useful are:

• The convergence of government and operator interests should be inherent in the contract design.
• There should be mechanisms for quick decision-making thus enabling efficient E&P practices with inherent systems to protect the private sector from any financial implications of the same.
• A general acceptance of any flexibility in the contract for timely solutions. Good practices should be supported over binding regulations on the private sector.
• Further there should be favourable exploration conditions which assure the sanctity of the spirit is maintained.

Thus, clear policymaking, contract administration and regulation functions are needed to make the industry more efficient, transparent and trustworthy.