ONGC rose 3% to Rs.165.10 today morning; it has since then come off that intra day high and is now at Rs.162 levels. Oil India also did well, rising 2% to Rs.213.15 though currently, it is just about holding on to the green.
Yesterday, the Cabinet reduced the pre-1999 oil and gas contracts, paving the way for a more proportionate sharing of statutory levies like royalty and cess between the operators of an area. This will ensure that the entire burden of levies is now not on ONGC and Oil India. These two companies paid even the private partner’s share of royalty and cess as the licensee under the original contract.
Along with this, the cabinet also extended the special dispensation of marketing and pricing freedom to natural gas produced from areas in the North Eastern region, Petroleum Minister Dharmendra Pradhan told reporters here. It also extended the Income Tax benefits to all the 28 oil and gas fields awarded before the advent of the New Exploration Licensing Policy (NELP) in 1999. To be able to face the geographical and logistical challenges, the exploration period has been increased by two years and appraisal period by one year.
Hopefully, with these moves in place, there would be unlocking of investments and boost oil and gas production.