PNG RULES AMENDED TO REVISE EXPLORATION
LICENCE FEE AND OTHER RENTAL CHARGES
In order to give
boost to the exploration and production activities in the country,
the Government has increased the rates of security deposit, annual
licence fee, mining lease fee, etc. This puts in place an effective
mechanism for faster growth of the oil sector with fuller support
of the State Governments. The proposal to revise these rates was
approved by Shri Ram Naik, Minister of Petroleum & Natural
Gas. A notification to this effect amending Petroleum & Natural
Gas Rules, 1959 (PNG Rules) has been issued by the Ministry of
Petroleum and Natural Gas. These measures acquire special significance
in view of the fact that these rates have not been reviewed since
1989. The revised rates have come into force w.e.f. 1st
April, 2003. The amended rates are in line with the global practices
to subserve the recent developments in hydrocarbon sector which
aims at accelerating the efforts to find more oil and gas in the
country.
The revisions, for
example, include doubling of security deposit for grant of exploration
licence to Rs. One lakh and security deposit for mining lease
to Rs. Two lakh. The yearly licence fee which earlier ranged between
Rs. 8 and Rs. 600 has gone up ranging between Rs. 50 and Rs. 1,000
depending upon the number of years. The mining lease rent (yearly
dead rent) which was Rs. 12.5 per hectare or part thereof for
first 100 kilometres and Rs. 25 per hectare or part thereof for
area above 100 sq. km. has been doubled to Rs. 25 and Rs. 50 respectively.
The initial licence or lease fee has also been increased (licence
fee from Rs. 10,000 to Rs. 25,000 and lease fee from Rs. 25,000
to Rs. 50,000). This decision has been taken after Petroleum Ministry
consulted all State Governments and UT Administrations and also
other stakeholders. All the States and the UTs would benefit where
exploration and production of oil, gas and coal bed methane (CBM)
activities are going on.
Besides, the provisions
of the Rules have been also appropriately amended in respect of
area and terms of licence and lease, shedding of area, survey,
transfer or assignment of right, cancellation of licence and lease,
regulation of operations, delivery of premises upon determination
of licence or lease etc. Two new clauses have been introduced
in the Rules – one relating to recovery of helium and the other
regarding cognizance of offences. Some of the obsolete and redundant
clauses in the rules have been deleted or amended.
The amended rules
have now been aligned with the new regime in place since 1999
when the Government started implementing New Exploration Licensing
Policy (NELP) and CBM Policy, etc. In addition, National Gas Hydrate
Programme (NGHP) to over see research and development and production
of gas hydrates in the country has also been initiated. With the
entry of several private sector, domestic and global players in
exploration and production business including multinationals,
it had become necessary for the government to review existing
regulations for exploration and production activities.
The upstream oil
and gas activities in the country are governed by Oil Field (Regulation
& Development) Act, 1948 (ORD Act) and PNG Rules 1959. The
ORD Act provides for the regulation of oil fields and for the
development of mineral oil resources. On the other hand, PNG Rules
regulate the grant of exploration licences and mining leases in
respect of petroleum and natural gas and for conservation and
development thereof.
