The next round of the government’s ambitious seventh exploration licensing policy—part of the new exploration licensing policy, or Nelp—due to be announced in April, is being delayed on account of pending clearances from the ministry of environment and forest, as well as the ministries of coal and defence.
Nelp was approved by the government in 1997 and operationalized in January 1999 to boost hydrocarbon exploration in the country. Under this, the government allocates the rights to explore blocks through a bidding process and has done this in six phases so far. But this requires prior clearance from a lengthy list of ministries. Apart from the three ministries mentioned above, the sanction of the ministries of finance, home affairs, external affairs and petroleum and natural gas is needed first.
The government plans to offer 70 blocks over around three lakh sq. km in the seventh Nelp round. Of this, more than 30 blocks on India’s west coast are in 90-100m-deep waters and can also be called high-risk blocks due to limited availability of data and no demonstrated success rate.
“We are still awaiting clearances from the ministry of environment and forests, ministry of defence and coal ministry,” a senior petroleum and natural gas ministry official said. He declined to give a new date or a time frame under which the rounds will be announced.
The rounds have seen participation from private oil and gas exploration and production companies as it provides a level playing field to them by providing fiscal and contract terms similar to those accorded to state oil companies.
The seventh round was earlier expected to be announced in April this year, but it has been delayed. “As we do not want any complications to arise after the rounds are announced, we are waiting for the clearances,” the official said. Even the parliamentary standing committee on energy had commented that “the entire process (Nelp) can be completed in seven-eight months if the government makes concerted efforts to achieve the same.”
“Given the kind of overall success that Nelp rounds have had, we need to continue with the pace,” said Ravi Mahajan, partner at accounting firm Ernst & Young. “There should be no delay.”
Even before the rounds are announced, frantic negotiations have started among Indian firms to scout for partners. Companies such as NTPC Ltd are looking for foreign entities to partner them in the next round. Indian Oil Corp. is seeking a tie-up with Petrobras of Brazil, Petronas of Malaysia, Total of France and Shell. To attract foreign players, the government had also proposed to market Nelp licencesat roadshows in Houston,Calgary, London, Perth and Dubai.