Home >Politics >News >Contracts signed for only 13 out of 33 blocks

New Delhi: India’s ninth round of auctions of hydrocarbon exploration blocks turned out to be a low-key affair, with rights to explore only 13 blocks of 33 on offer awarded on Wednesday. These blocks have an investment commitment of at least $600 million (around 3,060 crore).

While 16 blocks were to be finally awarded under the new exploration licensing policy (Nelp), the production-sharing contracts for three blocks couldn’t be signed as the representatives of awardee Sankalp Oil and Natural Resources Ltd were not present. Eleven blocks were withdrawn and will be offered in the next round. Six blocks are still awaiting approval.

State-owned Oil and Natural Gas Corp. Ltd (ONGC) on its own and as part of a consortium was awarded six blocks. It is the operator in four blocks and parter in the remaining two.

Explaining the rationale for withdrawing 11 blocks, petroleum minister S. Jaipal Reddy said, “Profit petroleum offered was less than 15%, so they were rejected." Firms bidding for oil and gas exploration blocks offer to share production with the government after recovering costs. This is called profit petroleum.

While the winners of these blocks were known in March last year, the process was stretched out for over a year due to clearance delays. While one block had failed to elicit a bid in March last year, 33 blocks received 74 bids, the bulk of which were from state-owned oil companies.

“Yes, it has been delayed. The empowered committee of secretaries met three times before finalizing these 27 blocks. Of the six blocks that are still pending, one is awaiting the law ministry’s opinion, with two blocks awaiting clearance from the defence ministry. For the remaining three blocks, some clarifications have been sought from bidders on the net worth issues," petroleum secretary G.C. Chaturvedi said.

So far, Nelp rounds have generated 87 oil and gas discoveries in 26 exploration blocks with hydrocarbon reserves of at least 642 million tonnes of crude oil-equivalent.

“We have a long way to go. We are going to the 10th round as soon as possible. Before that we want to take a close look at the profit-sharing provisions, if it can be made more automatic and less intrusive," Reddy said. “Investment multiples have worked but it has also resulted in its own set of problems. We will see in the next round, whether to improve the formula."

“To complete Nelp 9, we had to run a longer distance than we did previously," Chaturvedi said. “We are trying to work out a system so that once an NOC (no-objection certificate) is given by a ministry, then the contractor doesn’t have to go to several places at different stages of exploration, drilling, development and production. Today we are meeting the cabinet secretary to simplify the process."

In another development, the petroleum ministry has sought 40,000 crore for state-owned oil marketers as compensation from the finance ministry for selling diesel, kerosene and liquefied petroleum gas at government-fixed prices. The total losses on this account to be borne by refiners in the fiscal ending 31 March are expected at 1.40 trillion compared with 78,190 crore last year. In the nine months ended December, they stood at 97,313 crore.

“The finance ministry has provided 45,000 crore as cash compensation in first three quarters. Upstream oil firms have provided another 37,000 crore," Chaturvedi said.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Edit Profile
My ReadsRedeem a Gift CardLogout