Oilfield services policy to invite investment from global exploration firms
The government is planning an ambitious oilfield services policy to invite investment from global exploration service providers like Schlumberger, Haliburton and Tanocean.
By Rajeev Jayaswal & Gireesh Chandra Prasad, TNN |
NEW DELHI: The government is planning an ambitious oilfield services policy to invite investment from global exploration service providers like Schlumberger, Haliburton and Tanocean. It is considering options like modifying existing SEZ Act, changing the Petroleum, Chemicals & Petrochemicals Investment Region (PCPIR) policy or having a new legislation for setting up petroleum economic zones (PEZ). The move aims at creating a domestic petroleum services sector, which is non-existent.
Currently, oil companies operating in the country hire services from foreign companies at a premium for long terms due to the non-existence of a local industry. The range of services include exploration, surveying, drilling as well as hiring equipment like drilling rigs. Exploration activity in the country is fast expanding especially due to significant discoveries on the east coast besides rising oil prices.
According to a government-commissioned study, oil producers in the country are set to double their geophysical survey activity and increase drilling and related activities five times in five years. Because of non-existence of such service providers in the country, 60% of the investment in exploration goes to foreign contractors.
The proposed policy would provide tax breaks and infrastructure facilities to companies that offer equipment and services like drilling rigs, seismic vessels, cementing services, electro-logging services and testing services. Service and equipment providers the world over are working overtime to meet order backlog and companies pay a premium for their service.
The idea of PEZs was initially mooted by the former petroleum minister Mani Shankar Aiyer which has now been revived by his successor Murli Deora. While a modification in the SEZ Act would include E&P-related services for tax exemptions, PCPIR would provide income-tax exemption for the developers and state-funded infrastructure.
Oilfield services industry has tremendous potential in the country as more sedimentary areas need to be explored than the 1.4 million km explored. According to an official study, the country’s 36% sedimentary area is unexplored or poorly explored.
Currently, oil companies operating in the country hire services from foreign companies at a premium for long terms due to the non-existence of a local industry. The range of services include exploration, surveying, drilling as well as hiring equipment like drilling rigs. Exploration activity in the country is fast expanding especially due to significant discoveries on the east coast besides rising oil prices.
According to a government-commissioned study, oil producers in the country are set to double their geophysical survey activity and increase drilling and related activities five times in five years. Because of non-existence of such service providers in the country, 60% of the investment in exploration goes to foreign contractors.
The proposed policy would provide tax breaks and infrastructure facilities to companies that offer equipment and services like drilling rigs, seismic vessels, cementing services, electro-logging services and testing services. Service and equipment providers the world over are working overtime to meet order backlog and companies pay a premium for their service.
The idea of PEZs was initially mooted by the former petroleum minister Mani Shankar Aiyer which has now been revived by his successor Murli Deora. While a modification in the SEZ Act would include E&P-related services for tax exemptions, PCPIR would provide income-tax exemption for the developers and state-funded infrastructure.
Oilfield services industry has tremendous potential in the country as more sedimentary areas need to be explored than the 1.4 million km explored. According to an official study, the country’s 36% sedimentary area is unexplored or poorly explored.
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