AOGO says trust gap between firms and the govt has led to micro management, delayed decisions and increased disputes

New Delhi : An association of top energy firms like Reliance Industries, Cairn and BP has demanded separation of oil field contract administration from regulation and policy making to bridge the trust deficit between companies and the government.

Asked by Petroleum Ministry to give views on ease of doing business in the sector, the Association of Oil and Gas Operators (AOGO) said, “A trust deficit between the principals to the contract has of late been the hallmark of Indian upstream sector.”

The trust issues, it said, arose “primarily from poor communications, misinformation of other parties winning strategies or assumption of a zero sum game.”            This situation has led to micro management, delayed decisions and increased disputes. To resolve this, AOGO recommended separation of oil and gas field “contract administration and facilitation from regulation and policy making.”

“Also, establish distinct processes for review and approval focusing on the intent of Production Sharing Contract (PSC), it said. The Ministry, it said, should outsource financial issues to non-contract administration authority to avoid cost recovery and investment disputes.

Stating that the Ministry needs to establish an overarching objective for the Indian upstream oil and gas exploration and production sector, AOGO said the same should be enshrined in contracts and ensure that any disputes or issues is resolved in consonance with those objectives.

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