The Hindu Business Line : Govt fine-tuning bidding process for oil, gas blocks

New Delhi May 20 Going by the belief that `two heads are better than one', the Petroleum Ministry has roped in independent international consultant Daniel Johnston to help modify the terms of bid evaluation criteria for the upcoming New Exploration Licensing Policy (NELP) round.

This is even as the Ministry/Directorate General of Hydrocarbons is working towards fine tuning the fiscal package and clearly defining the past performance criteria under the production sharing contract (PSC) for the seventh round of NELP, which is expected in August.

Daniel Johnston is an international petroleum advisory firm specialising in consultancy services on policy and strategy, financial and economic parameters, and advise for projects, properties and companies as well as licence rounds.

Focus on small players

According to official sources, there is thinking in the Ministry that the existing pre-qualification criteria could be tweaked in such a way that participation in the forthcoming auction round is not restricted to a few big players such as ONGC or Reliance Industries Ltd.

For on-land shallow water blocks, the Government plans to make marks for technical competency merely a pre-qualifying criterion. Award of the block would be based only on bid work programme and the fiscal package offered. This is expected to help open the bidding system to more players.

On whether the same policy could be extended to deepwater blocks or not could also be considered, sources added. The deepwater blocks require higher technical expertise, hence, a higher threshold limit could be prescribed for technical qualification.

Evaluation criteria

Currently, there are four evaluation criteria prescribed — acreage holding (experience of the operator), average annual accretion of proved and probable reserves, average annual production and geological assessment by the Government/Director General of Hydrocarbons.

Even as it has roped in a consultant to work on bid evaluation criteria, the Ministry, learning from its experience in the last NELP rounds, has been seeking views of the industry to address issues like profit petroleum (the Government's share of profit and past performance under the PSC). "The package should be such that it should have incentive for exploration and development activities," sources said.

The Ministry plans to put on offer 80-85 oil and gas blocks, of which about 34 are to be offshore and remaining on land. Indications are that a major chunk of these blocks would be on the West Coast. The Government has awarded 162 oil and gas blocks in the previous six NELP rounds, 52 of those in February, when most ended up in the hands of domestic public sector companies. ONGC bagged almost half the blocks on offer.

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