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| Two companies skip Nelp VII signing | |
| BS Reporter / New Delhi December 25, 2008, 0:29 IST | |
The government signed contracts for only 41 of the 44 oil exploration blocks awarded under the seventh round of the New Exploration Licensing Policy (Nelp VII) earlier this week after two companies which had won three blocks between them did not turn up.
Officials in the oil ministry, which signs the contracts with the winning companies on behalf of the President of India, said the two companies — Gujarat-based Geoglobal Resources and Interlink Petroleum — requested the government to postpone the signing of the contract as oil prices have tumbled by more than 70 per cent since June, making new investments economically unviable.
“The two companies have sought an extension. However, it remains to be seen if they will sign the contracts at all,” said a senior official in the ministry. “We cannot force them to sign, but they have won the bids,” he added.
Bidding for the 57 blocks on offer under Nelp VII closed on June 30. Crude oil prices averaged $132 per barrel during that month. Prices have since then fallen to an over four-year low of around $40 per barrel.
| NELP SO FAR |
| |
Blocks offered |
Blocks
bid for |
Bids received |
| Nelp I |
48 |
28 |
45 |
| Nelp II |
25 |
23 |
44 |
| Nelp III |
-27 |
24 |
52 |
| Nelp IV |
24 |
21 |
44 |
| Nelp V |
20 |
20 |
69 |
| Nelp VI |
55 |
52 |
165 |
| Nelp VII |
57 |
45*
|
181 |
| * 45 blocks were bid for under Nelp VII, but the govt awarded 44 blocks, after disqualifying one bloc |
A total of 181 bids were received for 45 of the 57 blocks auctioned, for which investments of $1.5 billion have been committed. The Cabinet in November approved the award of 44 blocks after disqualifying Cairn India’s bid for one block in the western offshore saying the returns to the government were not high enough.
An official with the Directorate General of Hydrocarbons (DGH), the technical arm of the oil ministry overseeing India’s exploration sector, said there were instances in previous Nelp rounds of companies delaying signing production sharing contracts with the government.
“The circumstances are different this time. These companies may have bid then because they saw value in high oil prices. The situation has changed completely in the last few months,” said the DGH official.
Interlink Chairman BC Bora did not comment, while Geoglobal Resources could not be reached for comment. Interlink, listed on the Bombay Stock Exchange, reported a loss of Rs 103.53 lakh in the quarter ended September 2008, according to a company statement to the stock exchange.
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