New Delhi, April 29 (IANS): The Cabinet Committee on Economic Affairs on Wednesday approved a policy on testing requirements for hydrocarbon discoveries made under the New Exploration and Licensing Policy.

"The policy will settle the long pending issue with regard to 12 discoveries in five blocks pertaining to Oil and Natural Gas Corp (six discoveries) and Reliance Industries (six discoveries) but will also establish a clear policy for the future," said a CCEA communique.

"The policy will also help in bringing out transparency and uniformity in decision-making as against the case-by-case approach in the past," it added.

The approval paves the way for the development of the 12 discoveries with gas reserves of around 90 billion cubic metres (bcm) valued at over Rs.100,000 crore at the current price for domestic gas of $4.66 per unit.

Contractors will now have the option of either relinquishing the blocks, develop the block after conducting a drill stem test (DST) with 50 percent of the cost being disallowed as penalty for not doing the tests on time, or develop the discoveries without conducting the test in a ring-fenced manner, the statement said.

Cost recovery for DST has been capped at $15 million.

"If the contractor does not opt for any one of these options suggested above within 60 days of the CCEA approval, then the area encompassing these discoveries shall automatically be relinquished," the statement added.