After 9 rounds of NELP, only 3 blocks producing

Aug 19 2013, 05:36 IST
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SummaryThis despite 113 finds from 254 blocks since 1999

The indispensability of crude oil imports which account for four-fifths of petroleum products consumed in and exported from the country and 34% of total imports has undermined the government’s ability to contain the trade and current account deficits, and the way forward is to augment domestic crude output and reduce import costs by acquisition of oil assets abroad. However, despite the allure it holds, global investors have stayed off India’s oil and gas sector and the latest data from the Directorate General of Hydrocarbons (DGH) on the experience with the new exploration and licensing policy (NELP) proves this beyond question. According to the DGH, only three NELP blocks have so far seen any kind of commercial production, even as 254 blocks have since 1999 been allotted to exploration companies in the nine rounds of NELP, from which 113 discoveries have been made.

The tenth round of NELP auctions to be held later this financial year might not also see a grand turnout of global oil giants seeking a slice of India’s hydrocarbon pie.

Companies have spend over $15 billion in winning bids to explore these NELP blocks since the first round of NELP kicked off in 1999. What’s worse is that the production from the three blocks that have gone into commercial production are anything but prolific. This includes the Reliance Industries-operated KG-D6 block where production has fallen significantly from 62 million metric standard cubic metres per day (mmscmd) in 2010 to about 14.2 mmscmd now.

The other two producing blocks are small finds off the Cambay Basin – the Niko-operated CB-ONN-2000/2 and the GSPCL-operated CB-ONN-2000/1. Oil ministry officials say Niko has decided to relinquish the CB-ONN-2000/2 block as the company finds it unviable for production, and the block will now be transferred to ONGC.

The oil ministry is currently awaiting defence and environment ministry clearances for 68 blocks

for the 10th round of NELP this year. This will be the second-highest offering of blocks since the advent of NELP in 1999. Of the blocks being considered for offering, 25 are deep water, 20 shallow water and 23 onshore blocks.

Operators say that poor production numbers cannot be pinned down to a single cause. AK Bannerjee, director (finance) at ONGC, said that the country is not as naturally endowed with hydrocarbons as some of the Gulf countries and, therefore, expecting production at those levels is unreasonable. “India has less than

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