After more than a two-year hiatus, India will launch auction of oil and gas blocks in January as it looks to attract foreign investors to boost domestic production.
“In order to accelerate domestic exploration, DGH (Directorate General of Hydrocarbons) has carved out about 86 blocks, for which necessary clearances are being taken from the ministries concerned. The offering of exploration blocks under NELP-X is likely to take place in the month of January, 2014,” Oil Minister M. Veerappa Moily said at KPMG Energy Conclave in New Delhi.
The last round, the ninth under the New Exploration Licensing Policy (NELP), was held in 2011 when 74 bids were received for 33 out of the 34 blocks on offer.
“The NELP regime has increased the exploration and production (E&P) activities in the nation. Under NELP, 100 per cent Foreign Direct Investment (FDI) has been permitted in exploration and production of oil and gas. All these policy measures have resulted in significant investments in the E&P sector,” Mr. Moily said.
He said NELP-X is likely to be announced at the Petrotech Conference in January.
If all 86 blocks are offered after getting necessary approvals, NELP-X will be the largest bid round ever since the advent of NELP in 1999.
The government has in previous nine rounds awarded 254 blocks for exploration of oil and gas. Last few rounds received tepid response with global majors staying away.
Of the 34 areas offered in NELP-IX in 2010, bids were received for 33 blocks at the close of bidding on March 28, 2011. Of these, only 19 blocks were awarded.
NELP-VIII was the largest round with 70 blocks being offered. But only 32 blocks could be awarded. In NELP-VII, 41 blocks out of the 57 areas offered were awarded while NELP-VI was by far the most successful round with 52 out of 55 blocks on offer finding bidders.
The first five bid rounds saw award of 107 blocks.
India has an estimated sedimentary area of 3.14 million square kilometres, comprising 26 sedimentary basins. At present 0.93 million sq km area is held under exploration and production in 19 basins.
The NELP was formulated in 1997-1998 to boost hydrocarbon exploration in the country.
It was designed to provide a level playing field where exploration licences would be granted through international competitive basis to foreign and national oil companies (NOCs).
NELP was first implemented in January 1999 and, to date, nine rounds have been completed.
The salient features of the NELP include freedom for operators to market crude oil the domestic market at market determined price; up to 100 per cent participation by foreign companies; no signature, discovery or production bonus and no mandatory state participation.