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Triple tonic for oil hunt

New Delhi, Dec. 22: The new gas price regime, revenue sharing mechanism and the removal of hurdles to exploration are likely to encourage global players to participate in the tenth round of oil and gas block auction next month.

The next round of New Exploration Licensing Policy (Nelp), which is likely to start around January 15, will have 86 oil and gas blocks on offer, the second highest since the introduction of Nelp in 1999.

Natural gas priced at $4.20 per million British thermal unit (mBtu) is expected to double from the beginning of the next fiscal. Moreover, there will be no cap on the price, which is expected to move up and down based on global rates at major consumption hubs.

Besides, the oil ministry is getting clearances from its counterparts to remove obstacles to exploration. Recently, mining giant BHP Billiton surrendered nine oil and gas blocks in the country after it failed to secure clearances from the defence ministry.

Australia’s Santos wants to exit from its two exploration blocks in the Bay of Bengal as it has not been able to start work because of a maritime dispute with Bangladesh and defence restrictions.

Oil ministry officials said as many as 54 blocks had received all clearances from various agencies, and the rest would get the approvals by the time they came up for bidding in mid-January.

Analysts said global players would be interested in the next round of Nelp if the clearances come before the bidding.

The government is hopeful that the new gas price methodology and production sharing contract based on the revenue sharing mechanism will encourage global majors.

Recently, multinationals such as BP Plc, Royal Dutch Shell PLC, Total SA, Chevron Corporation, ConocoPhillips, Santos and China National Petroleum Corporation had participated in the oil and gas bids in Myanmar and Bangladesh.

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.

The government has awarded 254 blocks in the previous nine rounds. The last few rounds received tepid response.

India has an estimated sedimentary area of 3.14 million sq km, comprising 26 sedimentary basins.

At present, 0.93 million sq km is held under exploration and production in 19 basins.

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