Centre flags off NELP-X; auctions start next month

Jan 13 2014, 00:13 IST
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Close to 20 blocks are awaiting clearances from different ministries like defence and environment. Close to 20 blocks are awaiting clearances from different ministries like defence and environment.
SummaryForty six blocks cleared; relinquished RIL block to be put up

As many as 46 oil and gas blocks that have received all ministerial clearances will be put up for bidding in the 10th — and likely the last — round of the New Exploration Licensing Policy (NELP-X) auctions, a number that could probably up go up to 60 by the time the auctions kick off in February.

Close to 20 blocks are awaiting clearances from different ministries like defence and environment.

However, this is almost 50% less than the earlier number of 86 that the government had proposed in November.

NELP-X, which was launched by Prime Minister Manmohan Singh and oil minister M Veerappa Moily at the Petrotech 2014 conference, proposes to offer 166,053 sq km of acreage, six times more area than what was awarded in the ninth round. Addressing the gathering, the PM said that India needs to increase energy supply by three to four times over the next two decades as it is slated to become the third-largest energy consumer by 2020.

Pertinently, the blocks to be put on auction under NELP-X round include gas discovery area the government got back from Reliance Industries in the KG-D6 block and the 9,000 sq km area around the Rajasthan (Barmer) block that Cairn India had contractually relinquished but has since asked for, sensing potential recoverable reserves.

BHP Billiton's block in the Andamans will also be auctioned afresh.

Moily said that India might move to a revenue-sharing contract model from the current production-sharing contract system where operators are allowed to recover costs, but will take into consideration the views of the Kelkar committee which has recommended sticking to PSC.

Oil ministry officials argue that the revenue-sharing model is more transparent and requires less government intervention in routine exploration and development activities. On the other hand, some analysts are worried that operators might not invest in risky deep-water projects as they do not enjoy the benefit of cost recovery any more.

Under NELP, 360 exploration blocks have been offered so far and 254 blocks have been awarded. Currently, 148 blocks are active and 106 have been relinquished (see table).

This will also be the first time that a comprehensive uniform licensing policy (ULP) covering all forms of hydrocarbons has been implemented. Therefore, using the same licence, conventional oil and gas as well as shale and coal bed methane (CBM) can be explored in the same block.

Petroleum secretary Vivek Rae said that the oil ministry has sought from the government

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