Budget 2023: Higher crude exploration drives non-tax revenue goal

The government’s push to massively raise the area under exploration and improve ease of doing business in granting petroleum exploration licences has led to a 37.3 per cent higher estimate of non-tax revenue from petroleum, officials told Business Standard.

Under the petroleum head, the latest Budget has listed out non-tax revenue collection estimates of Rs 24,185 crore in FY24. This is up an annual 37.3 per cent from the revised estimates of Rs 17,620 crore in FY23, and 20 per cent higher than the Rs 20,036 crore in FY22.

Officials said the government considered a higher amount of Petroleum Exploration License Fee being collected in FY24. The Ministry of Petroleum and Natural Gas (MoPNG) had also communicated the same to the Finance Ministry, they added. 

The government lists receipts from licence fees for the right of exploration of oil and gas, as well as royalty on off-shore crude oil and gas production.

Meanwhile, officials clarified that the rate of royalty collected from oil production has changed. It is calculated at 20 per cent of the sale price of crude. While royalty on production from online areas is payable to state governments concerned, those from the production of crude in offshore areas goes to the Centre.

More exploration

The Centre is aiming for the target of having 1 million square kilometres of area under exploration by 2030. Officials said MoPNG has given high priority to efforts that can quickly raise the current area under exploration. The area has doubled during the past five years to 207,692 (0.2 million) sqkm as of 2022.

India relies on imports to meet 85 per cent of its oil needs and 50 per cent of the natural gas requirement, as domestic production is inadequate, Petroleum and Natural Gas Minister Hardeep Singh Puri has said repeatedly.

“We are working on attracting investment from global majors such as ExxonMobil, Shell and BP. In case a large company such as these come into the Indian exploration scene, the area under exploration would shoot up. Consequently, the license fees would also go up significantly,” an official said.

Ease of doing business

The government is also working to facilitate easier oil and gas exploration by companies by bringing in a bevy of measures such as globally recognised and accepted dispute resolution mechanisms, and play-based exploration.

They are also working to reduce the number of licences required. Contractors and operators of oil & gas blocks must obtain statutory clearances and approvals from various state and central government authorities to start exploration and production activities. These include petroleum exploration licence, petroleum mining lease, environment-related approvals such as environment, forest, and wildlife clearance among others.

Clearances from the Ministry of Defence and Permissions from the pollution control, such as “consent to establish” and “consent to operate” are among other approvals that need to be taken. Delay in obtaining them affects the overall timelines and progress of the exploration and production projects.

The government has identified 22 processes for which documents self-certified by contractors are accepted, obviating the need for approval. Officials said the number of processes covered under the self-certification framework is being expanded.