Natural Gas Extraction Business Guide
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We documented 6 challenges in Natural Gas Extraction. Now get the actionable solutions — vendor recommendations, process fixes, and cost-saving strategies that actually work.
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All 6 Documented Cases
Royalty Rate Ambiguity और Dual Liability (Dead Rent vs Royalty)
Estimated ₹5-20 lakh annually per block from royalty rate errors; ₹50-200 lakh for major producing fields[1][3]PNG Rules create complex royalty structures: companies pay whichever is higher—dead rent or production royalty[3]. Historical rates (1990-1993 period) specify ₹481/metric tonne for crude oil and 10% of value for natural gas[1]. Current 2025 rules still allow state/central discretion on royalty rates. Manual tracking of production volumes, valve conditions, and rate applicability creates miscalculation risk.
Lease Approval Delays और Exploration Cost Overruns
₹1,000+ crore (proven in Ashoknagar case)[2]; typical multi-year delays = ₹100-500 crore per major blockThe Ashoknagar oilfield case demonstrates regulatory ambiguity creating financial losses. ONGC incurred over ₹1,000 crore in exploration and appraisal expenses without production commencement due to unclear lease value definitions under old PNG Rules. The state earned zero royalty revenue during this period.
Regulatory Ambiguity in Stamp Duty और Lease Value Definition
₹1,000+ crore (Ashoknagar opportunity cost); estimated ₹50-200 crore NPV loss per delayed major block[2]Pre-2025, PNG Rules did not define whether lease 'value' for stamp duty included only lease rent or both rent and future royalty. This ambiguity delayed Ashoknagar lease approval by years. 2025 amendments clarified: lease value = total lease rent over entire term; royalty is separate[2]. This decision error cost ONGC sunk exploration costs with no production revenue.
Petroleum & Natural Gas Rules Approval Delays और Lease Processing Inefficiencies
₹1,000+ crore (documented: Ashoknagar field exploration sunk costs); Typical lease: ₹50-200 crore annual capex frozen during regulatory approval; 180+ day delay = ₹4-12 crore per month production opportunity costThe Ashoknagar oilfield case demonstrates the financial impact: ONGC spent over ₹1,000 crore on exploration and appraisal with zero production revenue and zero state royalty for years due to ambiguity in the 1959 PNG Rules regarding lease definitions and approval authority. The new 2025 rules implement a 180-day mandatory approval timeline and 'deemed approved/rejected' provisions to eliminate indefinite delays.