The Directorate General of Hydrocarbon (DGH), which oversees exploration activities in India, has approached the market regulatory authority to restrain companies from announcing any oil or gas find without formal government clearance.
 
"To facilitate a common platform for reporting the available resources and reserves in the Indian fields, a uniform system of resource/reserves classification has been formulated by DGH," a petroleum ministry official said.

This system is currently under examination by the petroleum ministry, which also shares DGH's concern about the manner in which private and state-run exploration companies have been making unofficial announcements about oil or gas discoveries to influence market sentiment.

In an official communication to the Securities and Exchange Board of India (SEBI), DGH Director General V.K. Sibal urged the market regulator to prevent "companies from making such announcements, misleading government and investors".

Designed on the lines of the Norwegian Petroleum Directorate, the DGH compiles data, demarcates blocks to be offered for exploration under the New Exploration Licensing Policy (NELP) and oversees investment and work programmes under the product-sharing contract signed with exploration companies.

The new guidelines formulated by the DGH "require that new significant discovery made in any block may be declared only after detailed technical appraisal of the discovery with prior government approval", the official said.

The hydrocarbon body is keen that companies do not unduly influence market sentiment through huge claims about oil or gas discoveries without technical appraisal.

It has urged the SEBI to direct exploration companies to abide by the new norms being formulated, which would require them to submit technical information about new discoveries to the government and seek approval at least one week ahead of making a formal announcement.

"The practice of unduly influencing market sentiments have been adopted by both private sector companies like Reliance as also state-owned Oil and Natural Gas Corporation (ONGC)," a senior official pointed out.

As most of the exploration companies are listed companies, the DGH has pointed out that the guidelines being proposed are of "great national importance".

Since 2000, India has awarded around 90 blocks under the NELP programme to step up exploration activities and seek overseas and private investment. In addition, exploration activities are on in 28 blocks awarded under pre-NELP system.

The stepped up exploration activities have resulted in 32 significant discoveries being made by private and joint venture companies while national oil companies too have made 25 discoveries.

This has "resulted in 520 million metric tonnes of oil and oil equivalent gas (O+OEG) being established in the last four years".

The NELP has also seen inflow of around $7.2 billion foreign direct investment till 2004.

On May 31, bids for another 20 exploration blocks being offered under the NELP fifth round are expected.

Petroleum ministry and DGH officials are hopeful that the large-scale interest evinced by potential investors would see more oversees participation in the bids being submitted this time.