Govt To Review Oil Exploration Policy Evaluation Norms

The government has decided to have a second look at the bid evaluation criteria spelt out in the New Exploration Licensing Policy draft for the oil sector.

The finance and law ministries have been asked to study the criteria to iron out grey areas. The ministries will also study the bidding format for new exploration blocks, both offshore and onshore.

The need to review the bid evaluation criteria arose because of the serious irregularities highlighted by the CAG in the award of Panna and Mukta contracts to the Reliance-Enron joint venture. The need for a fresh look was stressed by the petroleum ministry at an inter-ministerial meeting last month.

 

The finance ministry apparently feels that a two-bid-two-stage system should be followed and the work programme and commercial terms of only those bidders who qualify on both technical and financial grounds be opened. It has recommended ascertaining the practices being followed in other countries regarding the bids being invited in two envelopes instead of a single envelope system. The petroleum ministry, however, feels that under the proposed bid evaluation criteria the work programme and commercial terms of bidders should be taken up for consideration only if they fulfil the technical and financial criteria. The finance ministry feels a weightage greater than the 15 points defined by the new policy should be given to the bidders commercial fiscal package.

According to the petroleum ministry, this lower weightage is being assigned as royalty and will be paid by the bidders, while in the earlier cases of joint ventures for oil exploration, the royalty and cess payments were being made by the domestic oil companies.

The new round of exploration blocks as well as future deep sea exploration will be governed by the new policy, which will also spell out contours of coal bed methane exploration.

Under the new policy, the national oil companies the Oil and Natural Gas Corporation and Oil India Limited will have to compete with private firms for exploration acreage.