Vajpayee threw light on the policy packages at a 70-minute review of the workings of the union ministry of petroleum and natural gas during the day. According to an official spokesman, notices for the new exploration and licensing policy (NELP), deep water exploration and a scheme for tapping coal bed methane gas, would be issued by August this year.

The NELP, first announced in last year's budget, has been pending in the absence of a tax code, containing more attractive fiscal incentives for exploration companies.

The Indian Law Institute has already been entrusted with the job of working on a draft legislation for a gas regulatory authority. Fiscal incentives are also being discussed for both refinery projects and exploration and production.

At the meeting, that was also attended by finance minister YashwantSinha and deputy chairman of the planning commission Jaswant Singh, apart from the ministers for petroleum and natural gas, crude imports alone were projected to shoot up to 84 million tonne by the year 2002, from 35 million tonne last year.

The focus for the future, said an official spokesman, would be to import raw material like crude and add value within the country. The import of petroleum products, he said, should drop to eight million tonne by the end of the Ninth Plan from 22 million tonne last year.

The prime minister emphasised the need for oil security. He envisaged a need for deep water exploration by national oil companies and a need to scout for oil reserves abroad. He felt that the Indian diplomatic missions abroad should be involved in the national oil companies' search for equity oil abroad.

So far ONGC Videsh is the only national company engaged in oil exploration and production abroad. The centre has also been encouraging other oil public sector undertakings like Indian OilCorporation, Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Limited and Oil India Limited to look for equity oil overseas either on their own or through strategic partners.

To expedite NELP, efforts are already on to evolve a more friendly tax code and rationalise the oil royalty scheme, the spokesman said. Oil companies opting for NELP should get duty sops like a seven-year tax holiday, duty exemption for capital goods imports and a substantial reduction in royalty.

An amendment of the Oilfields Act is already being contemplated, to allow oil exploration companies the promised 12.5 per cent royalty, instead of the roughly 20 per cent prevalent now. The NELP allows a further royalty concession, restricting the state levy to five per cent for deep sea exploration.

A policy framework for tapping coal bed methane has been in the offing for some time. The gas widely available in the country has so far only been commercially exploited in the US.

Union minister for petroleum TRamamurthy and minister of state Santosh Kumar Gangwar pleaded for duty concessions for capital goods imports for oil refineries.