In late June 2020, the Government of India approved another policy reform for the upstream sector of India, to boost the domestic production. Through a press release on 25 June 2020, the Directorate General of Hydrocarbons (DGH), upstream regulator of the Indian Government, announced guidelines for "early monetisation of hydrocarbon discoveries under Production Sharing Contracts (PSCs) and Revenue Sharing Contracts (RSCs)".   It is understood that this reform now permits companies to commercially produce from discoveries, before completion of other activities such as appraisal, declaration of commerciality (DoC) and submission of development plan (DP)/field development plan (FDP) etc., in the block under exploration phase as per contractual provisions. Previously, the operators were required to submit documents to prove commerciality of the discovery, after carrying out an appraisal programme, in a stipulated time framework. Following DoC approval, the companies were required to take FDP approval that includes an investment plan and consent for the production profile, before putting a discovery onstream.   Below is the brief summary on policy reform for early moneisation of hydrocarbon discoveries.     The government has clarified that      in view of contractual provisions, the timelines given under the Article      on âDiscovery, Development and Productionâ or similar Articles of the      PSC/RSC are the maximum timelines for development and monetisation of      discoveries. There are no restrictions on monetisation of discovery at an      early stage within these timelines.   Â The operators are required to comply to      following guidelines for early monetization:     The operator will request for Petroleum Mining Lease (PML) to DGH and submits its plan to develop (referred as Early Development Plan (EDP)), once there is a discovery in the block. The PML request will come along with relevant details including development plan, estimated cost and production profile. The government noted that the DGH will process the PML request as per applicable Petroleum & Natural Gas Rules, for recommendation to competent authority for grant of PML.      The government has clarified that all other activities prescribed in the PSC/RSC Article on âDiscovery, Development and Productionâ or similar Articles, will be carried out in accordance with the contractual provisions and within the timelines prescribed in the contract.      It is also noted that all such early monetised discoveries for which PMLs would be granted will be subsumed in the total development area and PML of the block/development area, at the time of approval of DP/FDP (as defined in PSC/RSC) for development of the total block/development area.      The government indicated that the production from such early monetised discoveries will be considered as commercial production and companies will pay statutory levies, cost recovery, sharing of profit petroleum, revenue sharing, etc. as per the provisions of respective PSC/RSC and other extant rules/regulations/guidelines.      The government noted that all other      terms and conditions will remain as per applicable PSC/RSC provisions and      other extant rules/regulations/guidelines.
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