Oil explorers may get legal shield if assets stripped off
"If any measure or series of measures taken by the government or the state government substantially or permanently deprives the contractor of the ownership of any assets being utilised for mineral oil operations, or of its rights under the lease or this contract, the contractor shall be entitled to compensation," the draft contract states.
The compensation will be equivalent to "all costs and expenditures incurred in respect of mineral oil operations, up to that point relating to such asset or rights deprived," per the draft.
However, compensation will not be paid if the company hasn't submitted a field development plan for the specific field, or if the government action was prompted by the need to protect its own rights or legitimate public interests.
Energy giant
ExxonMobil
has for years demanded that exploration contracts provide a
legal shield
against government moves to expropriate assets. Without using the term 'expropriation', the draft contract attempts to address concerns like those raised by Exxon by including a provision for compensation, an official said.
An Exxon India executive previously told ET that its demand for protection against expropriation was "rooted in experience," citing how it faced expropriation after a change in government in Venezuela in the past.
The government is reworking the Model Revenue Sharing Contract (MSRC) to attract large
foreign oil companies
, which have largely stayed away from India's exploration licensing rounds under the Open Acreage Licensing Policy introduced eight years ago. Scarce exploration success and maturing fields have led to falling output and rising dependence on oil and gas imports.
Globally, capital allocation for exploration has been shrinking and is being increasingly directed toward regions offering the best returns and stronger investment protection. Lower oil prices are also making it harder for multinationals to commit capital to countries like India, which are not known for abundant petroleum resources.
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Time of India
4 days ago
- Time of India
Oil explorers may get legal shield if assets stripped off
New Delhi: An explorer will be entitled to compensation if the government takes away its assets or contractual rights under an oilfield agreement, according to a draft contract proposed by the oil ministry. The move aims to address international energy companies' long standing demand for protection against expropriation. "If any measure or series of measures taken by the government or the state government substantially or permanently deprives the contractor of the ownership of any assets being utilised for mineral oil operations, or of its rights under the lease or this contract, the contractor shall be entitled to compensation," the draft contract states. The compensation will be equivalent to "all costs and expenditures incurred in respect of mineral oil operations, up to that point relating to such asset or rights deprived," per the draft. However, compensation will not be paid if the company hasn't submitted a field development plan for the specific field, or if the government action was prompted by the need to protect its own rights or legitimate public interests. Energy giant ExxonMobil has for years demanded that exploration contracts provide a legal shield against government moves to expropriate assets. Without using the term 'expropriation', the draft contract attempts to address concerns like those raised by Exxon by including a provision for compensation, an official said. An Exxon India executive previously told ET that its demand for protection against expropriation was "rooted in experience," citing how it faced expropriation after a change in government in Venezuela in the past. The government is reworking the Model Revenue Sharing Contract (MSRC) to attract large foreign oil companies , which have largely stayed away from India's exploration licensing rounds under the Open Acreage Licensing Policy introduced eight years ago. Scarce exploration success and maturing fields have led to falling output and rising dependence on oil and gas imports. Globally, capital allocation for exploration has been shrinking and is being increasingly directed toward regions offering the best returns and stronger investment protection. Lower oil prices are also making it harder for multinationals to commit capital to countries like India, which are not known for abundant petroleum resources.
Time of India
5 days ago
- Time of India
Oil explorers may get legal shield if assets stripped off
New Delhi: An explorer will be entitled to compensation if the government takes away its assets or contractual rights under an oilfield agreement, according to a draft contract proposed by the oil ministry. The move aims to address international energy companies' long standing demand for protection against expropriation. "If any measure or series of measures taken by the government or the state government substantially or permanently deprives the contractor of the ownership of any assets being utilised for mineral oil operations, or of its rights under the lease or this contract, the contractor shall be entitled to compensation," the draft contract states. Explore courses from Top Institutes in Please select course: Select a Course Category Others Design Thinking Artificial Intelligence MBA Degree Management Finance Data Science CXO MCA Data Analytics Operations Management Leadership Digital Marketing Public Policy healthcare Product Management Cybersecurity Data Science Healthcare others Project Management Technology PGDM Skills you'll gain: Duration: 16 Weeks Indian School of Business CERT-ISB Transforming HR with Analytics & AI India Starts on undefined Get Details Skills you'll gain: Duration: 7 Months S P Jain Institute of Management and Research CERT-SPJIMR Exec Cert Prog in AI for Biz India Starts on undefined Get Details Skills you'll gain: Duration: 9 months IIM Lucknow SEPO - IIML CHRO India Starts on undefined Get Details Skills you'll gain: Duration: 28 Weeks MICA CERT-MICA SBMPR Async India Starts on undefined Get Details The compensation will be equivalent to "all costs and expenditures incurred in respect of mineral oil operations, up to that point relating to such asset or rights deprived," per the draft. However, compensation will not be paid if the company hasn't submitted a field development plan for the specific field, or if the government action was prompted by the need to protect its own rights or legitimate public interests. Energy giant ExxonMobil has for years demanded that exploration contracts provide a legal shield against government moves to expropriate assets. Without using the term 'expropriation', the draft contract attempts to address concerns like those raised by Exxon by including a provision for compensation, an official said. An Exxon India executive previously told ET that its demand for protection against expropriation was "rooted in experience," citing how it faced expropriation after a change in government in Venezuela in the past. The government is reworking the Model Revenue Sharing Contract (MSRC) to attract large foreign oil companies , which have largely stayed away from India's exploration licensing rounds under the Open Acreage Licensing Policy introduced eight years ago. Scarce exploration success and maturing fields have led to falling output and rising dependence on oil and gas imports. Globally, capital allocation for exploration has been shrinking and is being increasingly directed toward regions offering the best returns and stronger investment protection. Lower oil prices are also making it harder for multinationals to commit capital to countries like India, which are not known for abundant petroleum resources.
Time of India
5 days ago
- Time of India
Exxon in talks with Trinidad for seven deepwater blocks
Exxon Mobil has begun negotiations with the Trinidad and Tobago government to explore for oil and gas in up to seven deepwater blocks off the East Coast of the Caribbean country, which the top US oil producer left more than two decades ago, two sources close to the talks told Reuters. The areas Exxon is interested in are located north of the company's prolific Stabroek block in Guyana, the fastest-growing oil production province in the world, the people said. Exxon and partners Hess and CNOOC have discovered more than 11 billion barrels of recoverable oil and gas in Stabroek and plan to produce more than 900,000 barrels per day of light sweet crude later this year. Trinidad and Tobago is speaking with several major oil and gas companies, Trinidad and Tobago's Energy Minister Roodlal Moonilal told Reuters on Tuesday. "We are in discussions with major players to ramp up exploration and production within and outside of bid rounds," Moonilal said, without disclosing names. Exxon said it does not comment on rumors or speculation. Exxon left Trinidad and Tobago in 2003 after a failed exploration program. Under the new government of Prime Minister Kamla Persad-Bissessar, Trinidad aims to rejuvenate investment, especially offshore, where more gas output is needed to support the nation's liquefied natural gas (LNG) and petrochemical industries. Since she took office in April, a flagship offshore gas project with neighboring Venezuela that lost its US authorisation to move forward has been shelved, while the government has focused efforts on deepening ties with the region's other energy producers. According to Trinidad's laws, the government can individually negotiate areas for exploration and production if they are not included in a competitive bidding round. Trinidad and Tobago is in the middle of a deepwater auction that has been extended to close on September 17, and which does not include the blocks Exxon is negotiating for. If Exxon and Trinidad reach an agreement, the US producer could acquire almost all the ultra deepwater blocks that remain unlicensed. The large discoveries of oil and gas made in recent years in the Guyana-Suriname basin are one of the reasons why Trinidad is now seeing a renewed interest in its ongoing deepwater auction, the country's energy minister said at a conference early in July. Moonilal said Trinidad was open to bids outside of auctions and hinted at the negotiations. "We are currently considering one such proposal, and if the negotiations are successful, a major announcement will soon be made," he added.>
