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Govt to offer 68 blocks in 10th round of New Exploration Licensing Policy

02 Apr 2013 Evaluate

In the 10th round of New Exploration Licensing Policy (NELP), the government may offer around 68 blocks or areas for exploration of oil and gas in 2013. This will be the second highest offering of block since the advent of NELP 1999. Among the blocks being considered for offering in NELP-X, 25 are deep water, 20 shallow water and 23 on land blocks.

NELP-X is expected to be held on new terms in which a bidder shall be asked to quote the amount of oil or gas output it is 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. These new terms are based upon the recommendation of panel headed by Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan.  

Currently, oil companies are first allowed to recover the entire cost of exploration and production and only then share the profit with the government. However, this approach had been criticized by the Comptroller and Auditor General of India (CAG) as it encouraged companies to delay government getting larger share by increasing capex.

Further, it is also reported that the oil ministry and Directorate General of Hydrocarbons (DGH) are in the process of getting various clearances for offering the blocks. Regarding the steps for clearance of oil blocks, the oil ministry has sought defence clearance for offering of the blocks and the DGH is coordinating with the Environment Ministry for environment and forest nod as the proposed blocks under NELP-X are located near the reserve forests, wild life sanctuaries, national parks and bio-diversity.

In the previous nine rounds of NELP, the government has awarded 254 blocks for exploration of oil and gas. The first five bid rounds saw award of 107 blocks. However, the last few rounds received a tepid response with global majors staying away. 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.  

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