## Report on Amendment to Guidelines on Site Restoration and Abandonment Offshore and Onshore Oil and Gas Production Sites
**1. Executive Summary:**
This report analyzes the Government of India's Notification, dated August 26, 2021, amending the existing Guidelines on Site Restoration and Abandonment of Offshore and Onshore Oil and Gas Production Sites, originally notified on May 1, 2018. The amendment primarily focuses on revising the regulations surrounding the Site Restoration Fund (SRF), offering contractors greater flexibility in managing their SRF obligations through the use of Bank Guarantees (BGs) in specific phases and clarifying procedures for fund withdrawal and expenditure. The key finding is that the amendment provides operators with alternative methods for securing decommissioning funds, which may ease initial financial burdens and streamline the site restoration process.
**2. Introduction:**
This report provides an overview and analysis of the Notification issued by the Ministry of Petroleum and Natural Gas on August 26, 2021, which amends the Guidelines on Site Restoration and Abandonment of Offshore and Onshore Oil and Gas Production Sites. The analysis is based solely on the text provided in the notification.
**3. Policy Overview:**
* This notification is an amendment to the original Guidelines on Site Restoration and Abandonment of Offshore and Onshore Oil and Gas Production Sites, notified on May 1, 2018 (Notification No. O32011752013ONGI).
* The core objective of the original policy, as inferred from the amendment, is to ensure adequate financial provisioning and proper execution of site restoration and abandonment activities at oil and gas production sites.
**4. Background and Rationale:**
This amendment appears to be designed to address potential inflexibilities or financial burdens associated with the original SRF guidelines. The provision for using Bank Guarantees (BGs) suggests a need to provide operators with more manageable payment schedules, especially during the initial years of production or in existing fields where SRF accounts are not yet established. The allowance for phased withdrawals and adjustments to the BG amount based on project progress suggests an effort to align fund utilization more closely with the actual decommissioning activities.
**5. Key Provisions / Changes:**
The core change introduced by the amendment revolves around Paragraph 6 of the original guidelines, which pertains to the Site Restoration Fund (SRF). The following details the most impactful modifications:
* **Specific Part Changed:** Paragraph 6, relating to the Site Restoration Fund (SRF).
* **New Rules/Provisions:**
* **Flexibility with Bank Guarantees (BGs):**
* For new fields, contractors can submit a BG for up to 3 years after the first commercial oil/gas production instead of immediately opening an SRF account (6.2).
* For existing fields without an SRF, contractors can submit a BG within 6 months of the amendment notification for up to 3 years before creating the SRF account (6.3).
* In the 4th and 5th years, contractors can submit BGs for up to 75% and 50% respectively of the cumulative amount required in the SRF, depositing the remaining balance (6.4). After the 5th year, the BG amount should not exceed 50% of the cumulative amount required.
* **Decommissioning Cost Updates:** Decommissioning costs can be evaluated and updated every 3 years, based on an independent third-party assessment submitted to the DGH (6.7).
* **Phased Withdrawals from SRF:** Contractors can withdraw funds in four or more phases based on the approved Work Programme and Budget (WPB) (6.8b). They must submit a utilization certificate validated by a third party. Alternatively, the contractor can withdraw an advance of up to 100% of the fund required if they submit a BG of equivalent amount.
* **BG Amount Adjustments:** BG amounts can be adjusted on a pro-rata basis annually, according to the value of the remaining site restoration work (6.8d).
* **Effect of Changes:**
* The changes provide operators with increased financial flexibility, allowing them to defer some SRF contributions through BGs, especially in the initial years. This could potentially free up capital for operational expenses during those early stages.
* The allowance for periodic cost re-evaluation ensures that the SRF or BG amount remains aligned with current decommissioning cost estimates.
* Phased withdrawals and BG adjustments streamline the fund utilization process, linking it more directly to actual site restoration progress.
**6. Target Audience and Stakeholders:**
The primary target audience and stakeholders for this amendment are:
* Contractors involved in offshore and onshore oil and gas production in India, particularly those operating under Production Sharing Contracts (PSCs).
* Operators of oil and gas fields, both new and existing.
* The Directorate General of Hydrocarbons (DGH).
* Management Committees (or Steering Committees) designated under relevant contracts.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:** The Directorate General of Hydrocarbons (DGH) is responsible for receiving and reviewing the decommissioning cost estimates. The Management Committee/Steering Committee approves Work Programme and Budgets (WPBs) and manages the site restoration process.
* **Timelines/Procedures:**
* Contractors in existing fields have 6 months from the policy notification date to submit a Bank Guarantee if they haven't established an SRF.
* Decommissioning cost estimates are to be updated every 3 years.
* Contractors must submit utilization certificates for withdrawn funds.
* Final expenditure and utilization statements are due within 60 days of the end of each financial year.
* BG amount adjustments can be made on an annual basis.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of these specific changes are:
* **Reduced Initial Financial Burden:** The option to use BGs instead of immediate SRF contributions should alleviate the financial strain on operators, particularly during the early stages of production or in existing fields.
* **Improved Alignment of Funds with Actual Costs:** The periodic re-evaluation of decommissioning costs and the ability to adjust BG amounts ensure that the financial provisions remain aligned with the actual cost of site restoration.
* **Streamlined Fund Utilization:** Phased withdrawals and BG adjustments should simplify the fund utilization process and improve the efficiency of site restoration activities.
* **Increased Contractor Investment:** By reducing the financial burden in early years, this policy change may encourage more investment in oil and gas production activities, knowing capital isn't locked up for long periods.
**9. Conclusion:**
The amendment to the Guidelines on Site Restoration and Abandonment of Offshore and Onshore Oil and Gas Production Sites introduces greater flexibility in managing the Site Restoration Fund through the strategic use of Bank Guarantees. This change aims to ease the financial burden on operators, streamline fund utilization, and ensure that financial provisions remain aligned with actual decommissioning costs. This amendment is significant because it reflects an effort to balance environmental responsibility with the economic realities of oil and gas production, potentially fostering a more sustainable approach to site restoration.
Key Entities Referenced
Ministry of Petroleum and Natural Gas: The Indian government ministry responsible for oil and gas.
Guidelines on Site Restoration and Abandonment Offshore and Onshore Oil and Gas Production Sites: Policy document being amended.
Site Restoration Fund: A fund established for the restoration of sites after oil and gas production activities.
Production Sharing Contracts: Agreements governing the sharing of production between the government and contractors.
Site Restoration Fund Scheme of 1999: A specific scheme related to the Site Restoration Fund, established in 1999.
Bank Guarantee: A financial instrument used as an alternative to depositing funds in the Site Restoration Fund under certain conditions.
Management Committee: A committee responsible for approving decommissioning estimates proposed by the Contractor.
Unit of Production method: A method used to calculate the funding in SRF account or BG amount i.e. Reserve of the field to Production ratio.
DGH: An authority to whom the decommissioning cost estimate is submitted by the Contractor.
Annual Work Programme Budget: A budget that includes estimates of site restoration activities proposed by the Contractor to the Management Committee.
Revenue Sharing Contract: Contract where revenue is shared.
CBM Contract: Contract related to Coal Bed Methane.
Steering Committee: A committee designated and established under the relevant contract for the purposes of management, facilitation or proper conduct of the operations.
Amar Nath: Addl. Secy.
New Delhi: City in Delhi, India. Location of notification.
Delhi: A state and union territory of India.
रजिस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
सी.जी.-डी.एल.-अ.-26082021-229257
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असाधारण
EXTRAORDINARY
भाग I—खण्ड 1
PART I—Section 1
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 237] नई दिल्ली, बृहस्ट्प जतवार, अगस्ट्त 26, 2021/भाद्र 4, 1943
No. 237] NEW DELHI, THURSDAY, AUGUST 26, 2021/BHADRA 4, 1943
परे ोजलयम और प्राकृजतक गसै मत्रं ालय
अजधसचू ना
नई दिल् ली, 26 अगस्ट् त, 2021
स्ट्थ ल बहाली और अपतट तथा अजभतट तेल और गसै उत्प ािन स्ट्थ लों के पररत्य ाग के सबं ंध म ेंदििा-जनििे ों की अजधसचू ना म ेंसिं ोधन।
स.ं अन्व ेषण-15019(25)/68/2017-ओएनिी-V (ई-4353).—भारत सरकार स्ट् थल बहाली और अपतट तथा अजभतट तेल
और गैस उत् पािन स्ट् थलों के पररत् याग के संबंध में दििा-जनििे ों से संबंजधत पेरोजलयम और प्राकृजतक गैस मंत्रालय की दिनांक
01 मई, 2018 की अजधसूचना संख या. ओ-32011/75/2013-ओएनिी-I में एतद्द्वारा जनम्न जलजखत सिं ोधन करती है, नामत:
1. उक् त अजधसूचना में स्ट् थल बहाली जनजध से संबंजधत पैराग्राफ 6 को जनम् नानासार प्रजतस्ट् थाजपत दकया िाता ह:ै—
6. स्ट् थल पानस्ट् थाापना जनजध (‘‘एसआरएफ’’) िहां लागू हो, संबंजधत उत् पािन भागीिारी (पीएससी) संजविा (पीएससी)
प्रावधानों और वषा 1999 की स्ट् थल पानस्ट् थाापना जनजध योिना (एसआरएफएस) द्वारा िाजसत होती ह।ैं स्ट् थल पानस्ट् थाापना
जनजध योिना के जलए जनम् नजलजखत दििाजनििे बनाए गए ह:ैं
6.1 संजविाकार प्रथम वाजणजय क तेल/गैस उत् पािन के तारंत बाि एसआरएफ खाता खोलेगा।
6.2 नए क्षेत्रों के मामले में, संजविाकार, वैकजल् पक रूप से, प्रथम वाजणजय क तेल/गैस उत् पािन के 3 वषों तक की प्रारंजभक
अवजध के जलए बैंक गारंटी (बीिी) प्रस्ट् तात कर सकते हैं।
6.3 वाजणजय क उत् पािन वाल े ऐसे मौिूिा क्षेत्रों के मामले म ें िहां एसआरएफ अभी तक स्ट् थाजपत नहीं दकए गए ह,ैं
नीजतगत दििाजनििे ों की अजधसूचना के 6 माह के अंिर संजविाकार, वैकजल् पक रूप से, 3 वषों तक की अवजध के जलए एक
बैंक गारंटी िमा कर सकता ह।ै उत् पािन भागीिारी संजविा के बाि के वषों के जलए संजविाकार एसआरएफ खाता खोलेगा।
4768 GI/2021 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART I—SEC.1]
6.4 नए क्षेत्रों के साथ-साथ वाजणजयक उत्पािन करने वाले मौिूिा क्षेत्रों के मामले में चौथे वषा में संजविाकार या प्रचालक
वैकजल्पक रूप से एसआरएफ खाते में िमा करने के जलए अपेजक्षत संचयी राजि के 75% तक मूल्य के जलए बैंक गारंटी िमा
कर सकते ह ैंऔर िेष बकाया एसआरएफ खाते में िमा दकया िाएगा। पांचव ेंवष ामें, संजविाकार या प्रचालक वैकजल्पक रूप
स ेएसआरएफ खाते में िमा करने के जलए अपेजक्षत संचयी राजि के 50% तक मूल्य के जलए बैंक गारंटी िमा कर सकते हैं और
िेष बकाया एसआरएफ खाते में िमा दकया िाएगा। इसके बाि, संजविाकार या प्रचालक इस तरह से जनजधयां िमा करवाता
रहगे ा और बनाए रखेगा दक संबंजधत वष ामें एसआरएफ खाते में िमा करने के जलए अपेजक्षत संचयी राजि की 50% से अजधक
राजि बैंक गारंटी के रूप में बनाए रखी िाए।
6.5 स्ट् थल पानस्ट् थाापन जनजध (एसआरएफ) या बैंक गारंटी (बीिी) की राजि संजविाकार द्वारा यथा प्रस्ट् ताजवत और प्रबंधन
सजमजत द्वारा अनामोदित डीकजमिननंग आकलनों के अनारूप होगी।
6.6 एसआरएफ खाते या बैंक गारंटी राजि के जनजधयन की संगणना इकाई उत् पािन पद्धजत अथाात उस क्षेत्र के भंडार और
उत् पािन के अनापात का उपयोग करते हुए की िाएगी।
6.7 अलग-अलग पररसंपजियों के जभन् न–जभन् न पररचालन िीवनकाल और संसाधन लागतों में पररवतानों के कारण, प्रत् येक
3 वषा पर, डीकजमिननंग और स्ट् थल पानस्ट् थाापन लागत का मूल् यांकन और अधतन दकया िाए। संजविाकार द्वारा एक अहता ा
प्राप्त स्ट् वतंत्र तृतीय पक्षकार द्वारा जवजधवत आकजलत डीकजमिननगं लागत आकलन डीिीएच को प्रस्ट् तात दकया िाएगा।
संिोजधत आकलन एसआरएफ राजि अथवा बैंक गारंटी का आधार बनेगा।
6.8 एसआरएफ खाते से जनजधयों का आहरण, वषा 1999 की एसआरएफएस के पैरा 8 द्वारा अजभिाजसत होगा। पैरा 8 के
अनासार और आग े दििा-जनििे न के जलए जनम् नजलजखत अजतररक् त चरणों का अनापालन करने की िरुरत की जसफाररि की
िाती ह:ै
क. संजविाकार अनंजतम काया अनासूची और जविीय वष ा आधाररत संगत आकजलत भागतान सजहत, वार्षाक
काया योिना एव ंबिट (डब् ल् यूपी एंड बी) प्रबंधन सजमजत को प्रस्ट् ताजवत करेगा।
ख. इस प्रकार के अनामोदित काया कायाक्रम और बिट (डब् ल् यूपी एंड बी) के आधार पर संजविाकार को व् यय
के मि में एसआरएफ खाते से चार अथवा अजधक चरणों में जनजधयां आहररत करने की अनामजत िी िाएगी।
संजविाकार प्रत् येक चरणों के िौरान अथवा उनकी समाजप्त पर जनजधयों का उपयोग ििााते हुए, प्रबंधन सजमजत
को स्ट् वीकाया, तृतीय पक्ष द्वारा सत्याजपत चरण-वार उपयोग प्रमाण पत्र, डीिीएच को प्रस्ट् तात करेगा। बाि के
चरण के जलए अजग्रम िारी करने के जलए, संजविाकार को यह साजनज चत करना होगा दक वतामान चरण के
िौरान आहररत राजि के 75 प्रजतित के जलए उपयोग प्रमाण पत्र प्रस्ट् तात कर दिया गया ह ै और जपछले चरणों
की 100 प्रजतित जनजधयां आहररत कर ली गई हैं। वैकजल् पक रूप से, संजविाकार को समताल् य राजि के जलए
बैंक गारंटी िमा कर प्रबंध सजमजत द्वारा अनामोदित योिना के अनासार स्ट् थल पानस्ट् थाापन और पररत् याग के
जलए आव यक जनजध का 100 प्रजतित तक अजग्रम में आहररत करने का जवकल् प होगा।
ग. जवि वषा की समाजप्त के प चात 60 दिनों के अंिर, संजविाकार को जपछले वषा का अंजतम व् यय और
उपयोजगता जववरण प्रस्ट् तात करना होगा।
घ. बैंक गारंटी राजि के मामले में, अनामोदित पररत् याग योिना के अनासार स्ट् थल पानस्ट् थाापन िेष काया के
मूल् य के अनासार जवि वषा के अंत में वार्षाक आधार पर बैंक गारंटी राजि (अनापाजतक आधार पर) से
समायोजित/घटाई िा सकती ह।ै
ड. संजविाकार अनामोदित पररत् याग योिना के अनासार स्ट् थल पानस्ट् थाापन गजतजवजधयां िारू करेगा और
समापन प्रमाण पत्र प्रस्ट् तात करेगा।
च. एसआरएफ खाते में योगिान की राजि का उपयोग सभी पक्षकारों द्वारा केवल क्षेत्र पररत् याग एव ं स्ट् थल
पनास्ट् थाापन के जलए दकया िाएगा। स्ट् थल पानस्ट् थाापन और पररत् याग के प चात एसआरएफ की िेष राजि का
पीएससी और एसआरएफ योिना, 1999 के अनासार उपयोग दकया िाएगा।
"स्ट्पष्टीकरण—िहां स्ट् थल बहाली या पररत्याग संबंधी गजतजवजधयां उत्पािन जहस्ट् सेिारी संजविा, रािस्ट्व जहस्ट् सेिारी संजविा अथवा
सीबीएम संजविा की समाजि के बाि की िाएंगी या इनकी समाजि के बाि की िा रही हैं, इन दििाजनििे ों में िब्ि "प्रबंधन सजमजत"
िहां कहीं भी आए, तो इसका आिय, प्रबंधन, सासाध्य ता या प्रचालन काया के उजचत संचालन के उद्देय से संबंजधत संजविा के तहत[भाग I—खण् ड 1] भारत का रािपत्र : असाधारण 3
जनर्िष्ा ट और जसद्ध, िैसा भी मामला हो, प्रबधं न सजमजत या संचालन सजमजत होगा और ऐसी सजमजत इन दििाजनििे ों के तहत स्ट् थल
बहाली संबंधी कायाकलाप करने के सीजमत प्रयोिनों के जलए बनी रहेगी और प्रचालन िारी रखेगी ।’’
अमर नाथ, अपर सजचव
MINISTRY OF PETROLEUM AND NATURAL GAS
NOTIFICATION
New Delhi, the 26th August, 2021
Amendment of Guidelines on Site Restoration and Abandonment Offshore and Onshore Oil and Gas
Production Sites
No. Expl-15019(25)/68/2017-ONG-V(E-4353).—The Government of India hereby makes the following
amendments to its Notification in the Ministry of Petroleum and Natural Gas No. O-32011/75/2013-ONG-I dated the
1st May, 2018 relating to Guidelines on Site Restoration and Abandonment of Offshore and Onshore Oil and Gas
Production Sites, namely:—
1. In the said Notification, Paragraph 6 relating to Site Restoration Fund, is substituted as under—
“6. The Site Restoration Fund (“SRF”), where applicable, is governed by the relevant provisions of the
respective Production Sharing Contracts (PSCs) and the Site Restoration Fund Scheme (SRFS) of 1999.
Regarding Site Restoration Fund, following guidelines are made:
6.1 Contractor will open SRF account immediately after first commercial oil/gas production.
6.2 In the case of new fields, Contractor can alternatively submit Bank Guarantee (BG) for the initial period
upto 3 years after first commercial oil/gas production. The Contractor shall create SRF account for the
subsequent years of PSC period.
6.3 In the case of existing fields with commercial production, where SRF is not yet established, the
Contractor can alternatively submit Bank Guarantee within 6 months after policy guidelines notification for a
period upto 3 years. The Contractor shall create SRF account for the subsequent years of PSC.
6.4 In case of new fields as well as the existing fields with commercial production, in the 4th year, the
contractor or operator may alternatively submit bank guarantee for a value up to 75% of the cumulative
amount required to be deposited in the SRF account and deposit the remaining balance amount in the SRF
account. In the 5th year, the contractor or operator may alternatively submit bank guarantee for a value up to
50% of the cumulative amount required to be deposited in the SRF account and deposit the remaining
balance amount in the SRF account. Thereafter, the contractor or operator shall continue to deposit and
maintain funds in such a manner that not more than 50% of the cumulative amount required to be deposited
in the relevant year in the SRF Account is maintained in the form of bank guarantee.
6.5 The Amount of SRF or BG will be in accordance with decommissioning estimates as proposed by the
Contractor and approved by Management Committee.
6.6 The funding in SRF account or BG amount will be calculated using Unit of Production method i.e.
Reserve of the field to Production ratio.
6.7 Due to the varying operating lives of individual assets and changes in resource costs, decommissioning
and site restoration costs may be evaluated and updated every 3 years. The decommissioning cost estimate,
duly assessed by a qualified independent third party, will be submitted by the Contractor to the DGH. The
revised estimates will become the basis for amount in SRF or BG.
6.8 The withdrawal of funds from SRF account is governed by para 8 of the SRFS of 1999. To provide
further guidance in accordance with para 8, it is recommended that the following additional steps need to be
followed:
a. The Contractor shall propose estimates of the site restoration activities in the Annual Work Programme
& Budget (WP&B) to the Management Committee including provisional work schedule and
corresponding estimated payment on a Financial Year Basis.4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART I—SEC.1]
b. Based on such approved Work Programme and Budget (WP&B), the Contractors would be allowed to
withdraw funds in four or more phases from SRF account towards expenditure. The Contractors shall
submit to the DGH, a phase-wise utilization Certificate validated by independent third party who is
acceptable to Management Committee, showing utilization of funds during or at the end of each phase.
For release of advance for subsequent phase, Contractor to ensure that utilization Certificate is
submitted for 75% of the funds drawn for the current phase and 100% of the funds drawn for all
previous phases. As an alternative, the contractor shall have an option of withdrawing an advance of up
to 100% of the fund required for Site restoration and abandonment as per the plan approved by the
Management Committee by submitting Bank Guarantee of an equivalent amount.
c. Within 60 days after end of a financial year, the Contractors should submit final expenditure and
utilization statement for previous year.
d. In case of BG amount, the BG amount can be adjusted/ reduced (on pro-rata basis) by the Contractor on
an annual basis at the end of the financial year in accordance with the value of balance site restoration
work to be completed as per the approved Abandonment Plan.
e. The Contractor would undertake site abandonment activities as per the approved Abandonment Plan
and submit the completion certificate.
f. The contributions to the SRF account should be used only for the purpose of Field Abandonment & Site
Restoration by all parties. The balance amount in SRF after Site restoration and abandonment shall be
dealt with in accordance with provisions of PSC and SRF Scheme, 1999.
“Explanation.—Where site restoration or abandonment activities are to be carried out or are being carried out after
expiry of the Production Sharing Contract, Revenue Sharing Contract or CBM Contract, the term “Management
Committee”, wherever it occurs in these Guidelines, shall mean the Management Committee or Steering
Committee, as the case may be, designated and established under the relevant contract for the purposes of
management, facilitation or proper conduct of the operations and such Committee shall continue to subsist and
operate for the limited purposes of carrying out site restoration activities under these Guidelines.”
AMAR NATH, Addl. Secy.
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