India said it hoped to unlock gas and oil resources worth almost $40 billion by simplifying licensing rules and offering price incentives to recover gas from difficult offshore fields.

Energy demand in India far outstrips consumption, but regulated low prices for gas from prolific but challenging deepwater fields have deterred investment in the sector.

Under the reforms, companies will have more freedom to set the price of gas from new discoveries and existing finds not yet in production.

But they will be subject to a ceiling price set according to the landed price of alternatives such as fuel oil, naphtha, coal and liquefied natural gas, Oil Minister Dharmendra Pradhan told a news conference.

The ceiling price would be reviewed every six months.

This will help boost gas output by at least 35 million cubic meters a day (mmscmd) for 15 years, equivalent to a total of 6.75 trillion cubic feet over that period, Pradhan said. India’s current gas production is about 90 mmscmd.

The move will benefit companies like Oil and Natural Gas Corporation, the country’s top explorer, and Gujarat State Petroleum Corp, a government-run firm in the home state of Prime Minister Narendra Modi.

ONGC said last month it wanted higher gas prices before it starts production from its east coast deepwater block.

Reliance Industries, currently in a legal battle with the government over gas pricing, will have to either withdraw its case or wait for it to conclude before it can benefit from the new rules.

An oil ministry official said there would be no immediate output increase as production from these difficult fields would take at least three years to come on stream.

India, which imports two-third of its oil needs, will also offer a common exploration license for different hydrocarbons like oil, natural gas, shale oil and gas and coal bed methane, in order to more quickly tap its vast resources.

Pradhan said the new proposal would help reduce government intervention and could boost foreign investment in Indian oil and gas when global oil prices recover.

India has also decided to extend the exploration licenses of 28 discovered oil and gas fields, awarded mainly to ONGC and Oil India, without bidding.

The cabinet granted control of the western offshore Ratna and R-Series oil and gas fields to ONGC. The fields stopped production in 1996, when they were awarded to the Essar Group controlled by India’s billionaire Ruia brothers.

“Resource worth 2.61 trillion rupees ($38.92 billion) will be brought to production as a result of today’s decision,” Pradhan said.