With an aim to cut India's dependence on imports for meeting its energy needs, India will offer at least 56 oil and gas blocks under the 10th round of NELP auction under completely revamped terms. Tenth round of NELP auction will be the second highest offering of blocks since the advent of NELP in 1997, a common platform for public and private sector companies to bid for the blocks.
As per the government, 10th round of auction is likely to be held on new terms wherein 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. Presently, oil companies are allowed to share the profit with the government only after recovering the entire cost of exploration and production. Meanwhile, many Indian authorities like CAG had criticised this approach on grounds that it encourages companies to increase the capital expenditure and delay the government’s share.
Oil Secretary Vivek Rae has asserted that Oil Ministry also proposed to move to revenue-sharing model from the current production-sharing scheme where there will be no profit petroleum, no cost recovery, no investment multiple. Further, ministry also demanded for production-linked payment regime for NELP-X, which is considered more transparent, requiring less intervention in routine exploration and development activities. Meanwhile, new terms for auction are opposed by some oil and gas players citing that riskier deepwater exploration would be best suited if the government gives guarantee that all sunk costs will be first recovered from any oil or gas produced.
Meanwhile, oil ministry has formulated a roadmap for cutting India's dependence on imports to meet its oil and gas needs. India currently imports around 80 percent of its oil needs and the Ministry wants this to be cut to 50 percent by 2020 and by 25 percent in 2025 through intensive exploration and exploitation of untapped reserves. Presently, only 0.93 million sq km area in India is held under exploration and production in 19 basins as compared to total estimated sedimentary area of 3.14 million square kilometres, comprising 26 sedimentary basins.
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