The Empowered Committee of Secretaries (ECS) has approved a host of significant changes in the bid evaluation criteria and the production sharing contracts to be signed for the blocks being offered under the seventh round of the New Exploration and Licensing Policy (Nelp-VII).
The ECS, under the chairmanship of petroleum secretary M S Srinivasan, has put its stamp on the recommendation made by the empowered group of ministers (EGOM) on gas pricing that ?the price discovery process on arms length basis will be adopted in the future NELP contracts only after the approval of the price formula by the government.?
The changes approved by the ECS reads, ?The formula or basis on which the prices shall be determined, shall be approved by the government prior to invitation of price bids by the contractor for sale of natural gas to consumers/buyers within 60 days of receiving the proposal. Also, the price of gas arrived at through the approved formula will be applicable uniformly to all the consuming sectors.?
Another significant change approved by the ECS relates to export of oil and gas produced from the blocks offered under NELP-VII. For the first time, the production sharing contracts of these blocks will incorporate a clause, as per which, if India attains self-sufficiency in crude oil and natural gas, during any year, the companies will have the right to lift and export their share of oil and gas. However, if self- sufficiency ceases to exist, the position shall revert to domestic sale obligation.
Past experience and production shall give the bidders extra mileage. The ECS has approved the recommendation made by the directorate general of hydrocarbons (DGH) that well depth should continue to be a biddable item under Nelp-VII as was in Nelp-VI.
Also, based on the feedback received from stakeholders, the ECS has agreed to reduce the experience of production in the criteria for bidding consortia from beyond 1,000 metre bathymetry to 400 metre. In case a consortium partner is having production beyond 400 metre bathymetry up to 1,000 metre bathymetry, five points will be allotted.
However, if one consortium partner is having production beyond 1,000 bathymetry, full 10 points will be assigned.
In addition, the ECS has also agreed to bring down the upper limit of average annual production in deepwater blocks under the technical capability criteria from the earlier proposed 100 million barrels of oil and oil equivalent (mmboe) production to 50 mmboe. Under NELP-VI, the upper limit of production was fixed at 10 mmboe.