The Ministry of Petroleum and Natural Gas is taking precautionary measures to ensure companies do not give up oil and gas exploration blocks after the next round of New Exploration Licensing Policy (Nelp) bidding.
Recently, mining giant BHP Billiton had surrendered nine of its oil and gas blocks in India because it was not getting defence ministry clearances.
Eyeing the next round of Nelp, set to take place in January 2014, the ministry has set up an expert committee to look into prospective blocks that could face defence and environment hurdles. “The committee, including one ex-army man, an ex-navy man and an ex-forest official, would try to get initial clearances in advance and also avoid sensitive blocks coming under defence areas,” said a senior petroleum ministry official.
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The oil ministry is planning to offer as many as 68 blocks or areas for exploration of oil and gas in the 10th round of Nelp. In October, BHP Billiton had said that it exited nine out of its 10 oil and gas explorations projects in India, as it was unable to start operations due to want of defence clearances. Though the petroleum ministry tried to sort out the issue by holding talks with the company, ministry officials said that the company was not keen on it. “Those blocks were given during the eighth round of bidding, without getting initial clearances from the defence ministry,” he said. In 2011, the defence ministry also refused to give clearance to BHP Billiton for 3D surveys as it was coming under the navy’s strategic area called Angria Bank. The 10th round of NELP would be the second highest offering of blocks since Nelp’s advent in 1999. Of the blocks being considered for offering in Nelp-X, 25 are deep-water, 20 shallow-water and 23 onland blocks.
The government has, in the previous nine rounds, awarded 254 blocks for exploration of oil and gas. But the last few rounds got minimal response from global majors, with most majors staying away. While globally, blocks are awarded with a maximum size of 100-200 square km, Indian blocks are larger in size, ranging from 7,000-15,000 sq km.
“More clarity is needed on gas pricing, allocation and production sharing contracts,” said Debashish Mishra, senior director of Deloitte in India.
Approvals should be in place at the time of bidding
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 the award of 107 blocks.
