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Can Market Determined Pricing for Marginal Oil & Gas Fields Spur Investments in the Sector ?

News

The Cabinet has cleared a new policy for the auction of small oilfields with reserves worth Rs 70,000 crore that allows market pricing of oil and gas and keeps bureaucrats away from field management. 

Source:  ET

SNP Insights

Government new auction policy for marginal field holding reserve in tunes of 89 MTs is an excellent step towards energy security of country. Yet flip side of the story is whether this market determined pricing can attract the investors or not, when agreement would be on revenue sharing basis, unlike previous profit sharing model.  Considering very weak sentiment among the private players across the globe due to low oil prices, whether this new auction policy can attract private players remains a question, that can be answered in due time only.

Source: SNP Infra Research