Stating that it will take a considered view on the terms and conditions to be offered for the oil and gas blocks to be put up for auction under New Exploration Licensing Policy (NELP) round X, the Petroleum and Natural Gas Ministry would move the Cabinet with a proposal to move to the revenue sharing formula as suggested by the Rangarajan Committee from the present production sharing contract (PSC) regime.
“We will take a considered view of the situation. We do not have a closed mind. There is a certain proposal before us and we will take it to the Cabinet by this month end. We will also give a thought to the Kelkar Committee report on sticking to the PSC regime but will leave it to the Cabinet to take a final call on the issue,” Petroleum and Natural Gas Minister, Veerappa Moily told reporters at Petrotech 2014 here.
The government on Sunday unleashed 46 oil and gas blocks to be offered under the NELP X round but the launch was surrounded by uncertainty over the terms and conditions of the offer. Out of the 46 blocks on offer, 17 are on-land, 15 shallow-water and the remaining 14 are deep-water blocks.
However, Petroleum Secretary Vivek Rae said that the number of blocks on offer could go up to as much as 60 to 65 as some data was being complied for some other blocks. He said that bids for these blocks would be launched next month and then road shows would be held to invite the attention of domestic and international buyers.
“What we have done today here is that we are giving an insight into what we have to offer to the investors. We are putting before them the profile of the blocks. Other details including terms and conditions would be made absolutely clear next month. We have not taken a final view on anything and we will wait for the Cabinet to take view,” he remarked.
The blocks offered include some of the 9,000 sq km area in that Barmer block that Cairn had contractually relinquished, but is now seeking it back to connect the currently producing fields in the Rajasthan block. The areas offered include most of the 6,198.88 Sq of KG-D6 block that the ministry took away from Reliance Industries. This area includes five discoveries — D4, D7, D8, D16 and D23 — for which the Directorate General of Hydrocarbons (DGH) had opined that RIL missed deadlines for submission of investment plans.
While Cairn's relinquished area contains no discoveries, the area taken off KG-D6 has five gas discoveries and they hold 0.805 trillion cubic feet of reserves, or about one-fourth of the restated reserves in the currently producing Dhirubhai-1 and 3 (D1&D3) fields, and are worth $10 billion at current imported cost of gas.
Mr. Rae said the tenth round of auction will require bidders to quote the amount of oil or gas output they are willing to offer to the government from the first day of production. The company offering the highest share of oil or gas produced from the field would get the block. Under the present regime, oil companies can recover costs of exploration and production before sharing profit with the government.