New Delhi, Oct. 20: The government plans to hold the 10th round of oil and gas block auction in January and expects a large number of global players to participate to take advantage of the new gas price regime that will come into effect from April.
“We plan to hold the next round of New Exploration Licensing Policy (Nelp) this (financial) year. The new gas price regime would boost investor confidence,” oil minister M. Veerapppa Moily said.
Officials said the ministry was planning to offer 68 blocks, of which 25 would be deep water, 20 shallow water and 23 onland blocks.
This will be the second highest offering of blocks since the introduction of Nelp in 1999.
The government is hopeful that the new gas price methodology and production-sharing contract based on the revenue-sharing mechanism will encourage global majors to invest in the country.
Besides, the Directorate General of Hydrocarbons (DGH) and the oil ministry are in the process of getting various clearances from the defence and environment ministries to speed up the exercise.
In the previous nine rounds, the government had awarded 254 oil and gas blocks for exploration. The last few rounds received a lukewarm response with the global majors staying away.
The price of natural gas will be hiked from the beginning of the next fiscal from $4.20 per million metric British thermal units (mmBtu) now. According to the formula recommended by the C. Rangarajan committee, domestic gas will be priced at an average of imported LNG and international hub rates. Based on this formula, the price would have been $6.83 per mmBtu in the April-June quarter.
Global players such as BP, Royal Dutch Shell, Total SA, Chevron Corporation, ConocoPhillips, Santos and China National Petroleum Corporation had participated in the oil and gas bids in Myanmar and Bangladesh recently.
Officials said Nelp-10 would be held on new terms wherein a bidder would be asked to quote the amount of oil or gas output it was willing to offer to the government from the first day of production. The company offering the highest share would get the block.
At present, oil companies are allowed to first recover the entire cost of exploration and production and then share the profit with the government. This approach had been criticised by the Comptroller and Auditor General of India on the grounds that it encourages operators to show higher expenditure to defer the government’s share of profit.
India imports about 73 per cent of its energy needs. Over the years, the country’s dependence on oil imports has increased.
Moily has rolled out an ambitious plan that aims to reduce imports by 50 per cent by 2020, 75 per cent by 2025, and achieve self-sufficiency by 2030.
India has an estimated sedimentary area of 3.14 million sq km, comprising 26 sedimentary basins. At present, 0.93 million sq km area is held under exploration and production in 19 basins.
GOVT UPBEAT ON BIDS BY BIG FIRMS
- Blocks on offer: 68
- Deep-water blocks: 25
- Shallow water: 20
- Onland: 23
What’s in it for global players?
New gas price regime
from April 2014
contract based on
The DGH and oil ministry are getting clearances from defence and environment ministries to avoid standoff