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Legal, Regulatory and Tax February 2018 Oil & Gas Industry in India © Copyright 2018 Nishith Desai Associates MUMBAI SILICON VALLEY BANGALORE SINGAPORE MUMBAI BKC NEW DELHI MUNICH NEW YORK
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[email protected] © Nishith Desai Associates 2018 February 2018 Oil & Gas Industry in India Legal, Regulatory and Tax
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© Nishith Desai Associates 2018 Legal, Regulatory and Tax Oil & Gas Industry in India Contents 1. INTRODUCTION 01 2. INDUSTRY AT A GLANCE 03 I. Import 03 II. Export 03 III. Major Industry Players 04 3. RECENT INITIATIVES BY THE GOVERNMENT OF INDIA 05 4. FOREIGN INVESTMENT 06 5. REGULATORY AND LEGAL FRAMEWORK 07 6. THE DISCOVERED SMALL FIELDS POLICY AND BIDDING ROUND 13 I. Overview 13 II. Salient Features of Discovered Small Fields Policy 13 7. HYDROCARBON EXPLORATION AND LICENSING POLICY (HELP) 14 I. Overview 14 II. Uniform License 14 III. Revenue Sharing Model 14 IV. Marketing and Pricing Freedom for Crude Oil and Natural Gas 14 V. Open Acreage Policy 15 VI. Other Changes 15 8. HYDROCARBON EXPLORATION & LICENSING POLICY (HELP) OPEN ACREAGE LICENSING POLICY (OALP) BID ROUND – 1 16 I. The Bidding Process 16 9. DISPUTE RESOLUTION 20 I. Arbitration 20 II. Litigation 21 10. CONCLUSION 22
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© Nishith Desai Associates 2018 Oil & Gas Industry in India 1 Legal, Regulatory and Tax 1. Introduction India is one of the fastest growing major economies in the world and the third largest consumer of petroleum products, after US and China. 1 Although there is an increased focus on gas and renewables, demand for oil has always been on the rise, and is estimated to grow at least until 2040. 2 As per the report published by India Brand Equity Foundation (IBEF) 3 , India’s energy demand is expected to double to 1,516 million tonnes of oil equivalent (Mtoe) by 2035 from 723.9 Mtoe in 2016. Moreover, India’s share in global primary energy consumption is projected to increase by two-folds by 2035. India’s total oil imports rose 4.24 percent year-on- year to US$ 86.45 billion in 2016-17. India’s oil consumption grew 8.3 percent year-on-year to 212.7 million tonnes in 2016, as against the global growth of 1.5 percent, thereby making it the third-largest oil consuming nation in the world. India is the fourth- largest Liquefied Natural Gas (LNG) importer after Japan, South Korea and China, and accounts for 5.8 percent of the total global trade. 4 In 2016-17, India consumed 193.745 MMT of petroleum products, while the consumption stood at 184.674 MMT during 2015-16. In 2017-18, up to September, the figure stood at 96.82 MMT. India has always been an import dependent nation in the Oil and Natural Gas ( “O&NG” ) sector. India’s domestic crude oil production of 36.95 million tonnes in 2015- 16 barely met 20 percent of its oil needs. Natural gas output at 32.249 billion cubic meters meets 1. ‘Cautious optimism has returned across the industry’ (published on December 31, 2017), available on .
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