Govt to offer 68 blocks in 10th round of NELP

The company offering highest share of oil or gas produced from the field would get the block

India may offer as many as 68 blocks or areas for exploration of oil and gas in the 10th round of New Exploration Licensing Policy (NELP) this year.

This will be the second highest offering of block since the advent of NELP 1999, official sources said here.

Of the blocks being considered for offering in NELP-X, 25 are deep water, 20 shallow water and 23 onland blocks.

NELP-X is likely to be held on new terms wherein a bidder shall be asked to quote the amount of oil or gas output it is willing to offer to the government from the first day of production.

The terms being considered for NELP-X are what a panel headed by Prime Minister's Economic Advisory Council chairman C Rangarajan has suggested for future production sharing contracts (PSC).

The company offering the highest share of oil or gas produced from the field would get the block.

Currently, oil companies are allowed to first recover the entire cost of exploration and production and only then share the profit with the government.

This approach had been criticised by the Comptroller and Auditor General of India (CAG) as it encouraged companies to delay government getting larger share by increasing capex.

Sources said the Directorate General of Hydrocarbons (DGH) and the Oil Ministry are in the process of getting various clearances for offering the blocks.

While the ministry has sought defence clearance for offering of the blocks, the DGH is coordinating with the Environment Ministry for environment and forest nod.

The Environment Ministry is carrying out a sensitivity test to ascertain reserve forests and bio-diversity, marine park, wild life sanctuaries, national parks, areas having threatened flora and fauna and CRZ areas within the blocks proposed under NELP-X, they said.

The government has in previous nine rounds awarded 254 blocks for exploration of oil and gas. Last few rounds received tepid response with global majors staying away.

Of the 34 areas offered in NELP-IX in 2010, bids were received for 33 blocks at the close of bidding on March 28, 2011. Of these, only 19 blocks were awarded.

NELP-VIII was the largest round with 70 blocks being offered. But only 32 blocks could be awarded. In NELP-VII, 41 blocks out of the 57 areas offered were awarded while NELP-VI was by far the most successful round with 52 out of 55 blocks on offer finding bidders.

The first five bid rounds saw award of 107 blocks.

India has an estimated sedimentary area of 3.14 million square kilometres, comprising 26 sedimentary basins. At present 0.93 million sq km area is held under exploration and production in 19 basins.