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Business News/ Industry / Energy/  46 oil and gas blocks up for auction in Nelp-10
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46 oil and gas blocks up for auction in Nelp-10

Eventually 60-65 will be offered after clearances are obtained, says oil minister M. Veerappa Moily

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.Premium
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.

Greater Noida: India on Sunday offered 46 hydrocarbon blocks to investors under the 10th round of the New Exploration Licensing Policy (Nelp) through a revenue sharing regime that was recommended by a panel headed by C. Rangarajan, chairman of the Economic Advisory Council to the Prime Minister.

A panel led by former finance secretary Vijay Kelkar favoured the continuation of the current production sharing contract (PSC) framework, which allows for cost recovery by exploration and production (E&P) companies before they pay the government its share.

Of the 46 blocks on offer, 14 are in deep water, 15 in shallow water and 17 are onland. The focus this year is on obtaining the various clearances needed for operating these blocks to avoid any embarrassment after the blocks are awarded. Seventy three blocks awarded in earlier rounds had encountered problems related to clearances. “We are today profiling 46 blocks but eventually 60 to 65 blocks will be offered after clearances are obtained," said petroleum minister M. Veerappa Moily.

To make these rounds attractive and avoid the tepid response of the last round, the petroleum ministry has sought 10 years tax holiday for ultra-deep water exploration. “Petroleum ministry is discussing it with the department of revenue. The government is discussing the tax regime for oil and gas exploration in line with the proposed direct taxes code (DTC)," said petroleum secretary Vivek Rae.

Speaking at Petrotech 2014, a biennial conference, Prime Minister Manmohan Singh, said “we have made a number of changes in our energy policy regime in the last few months."

The government in December conditionally allowed Reliance Industries Ltd (RIL) to raise the prices of natural gas from 1 April 2014 after a panel led by C. Rangarajan suggested a system that would price the fuel at $8-8.5 per mmBtu. News agency PTI reported that the government put on auction the gas discovery area it snatched from Reliance Industries in KG-D6 block and the field that Cairn India is seeking to regain around its Rajasthan block, as part of the 46 blocks offered under Nelp.

Nelp was approved by the government in 1997—it kicked off in January 1999—in an effort to boost hydrocarbon exploration in the country. Under Nelp, the government allocates rights to explore hydrocarbon blocks through a bidding process and has done this in nine phases so far for 360 blocks, with an investment of around $21.3 billion. Of these 254 blocks, 148 are active while 106 have been relinquished.

The 10th round of NELP is being held at a time when interest in the Indian hydrocarbon sector is waning. A case in point being BHP Billiton Ltd, the world’s largest miner, surrendering its oil and gas exploratory fields it won at government auctions because its permission to explore was not cleared by India’s defence establishment.

The ninth round of auctions turned out to be a low-key affair; while one block failed to elicit a bid in March last year, 33 blocks got 74 bids, mostly from state-owned companies such as Oil and Natural Gas Corp. Ltd. Also, only 13 of the 33 blocks on offer were formally awarded in March last year, though they had actually won the bids a year ago—the delay was on account of the inability to get clearances.

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Published: 12 Jan 2014, 07:53 PM IST
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