The Hindu Business Line : Govt offers 57 oil, gas blocks in seventh round

Changes in bidding pattern: The Union Petroleum Minister, Mr Murli Deora (right), and the Petroleum Secretary, Mr M. S. Srinivasan, at the launch of the Seventh Round of global bidding for exploration blocks under the NELP-VII, in the Capital on Thursday.

Our Bureau

New Delhi, Dec. 13 The seventh auction round of oil and gas acreages launched by the Petroleum Ministry on Thursday aim to attract small investors, encourage foreign majors, as well as small and medium exploration and production companies.

Based on the experiences gained in the past auction rounds, which saw ‘extreme financial package’ being offered by certain companies, the fiscal package for the latest round has been modified to ensure the Government’s share of profit petroleum remains unaffected.

Announcing the launch of New Exploration Licensing Round-VII (NELP-VII), the Petroleum Minister, Mr Murli Deora, said, “The Government is offering highest number of exploration blocks ever – 57. The offered blocks include 19 deepwater blocks, nine shallow water blocks and 29 onland blocks. The bids will close on April 11.”

The Ministry hopes to attract about $3-3.5 billion investments in exploration under this round.

Profit share

The Government share of profit petroleum in the seventh round would be calculated against two tranches of pre-fixed formula as opposed to the six trance mechanism adopted in the previous NELP rounds. While the minimum and maximum share for the Government would be calculated as per the pre-fixed formula of revenue coming out of the amount of investment made in the block, the remaining shares of profit petroleum falling between the prescribed range are proposed to be worked out on a pro rata basis.

This would minimise any chance of companies playing with the Government share of profit during various periods of production. It implies that profit share would be lower at the lower end of investment and higher at the higher end.

Talking about the modifications in the bid evaluation criteria and production sharing contracts in the latest round, compared with the previous rounds, the Minister said, a new type of blocks – Type S -, covering small area up to 200 km has been introduced to attract small investors for exploration. A special dispensation in the form of waiver of technical capability criteria has been offered to the category.

To encourage small and medium exploration and production companies, technical capability for onland and shallow water blocks has been made a pre-qualification criterion and no weightage would be assigned for its evaluation.

To attract technically strong companies for deepwater blocks, in the latest round a new consortium sub-criterion has been introduced under the technical capability parameter. Additional marks would be given to those involving foreign partners with deepwater experience.

Out of the 57 blocks put on offer, 24 blocks are those which have been relinquished by the exploration companies, and 15 are those which were offered in the previous rounds but had no takers. Of the 39 such blocks (24+15) 19 are deepwater blocks, eight shallow water blocks, and 12 onland blocks.

Asked whether the operators who have surrendered these blocks would be allowed to re-bid for the same acreages in the latest round, official sources said, “those who have relinquished the blocks without meeting the minimum work programme commitment would not be allowed to re-bid as operators, but they can come in as consortium partners.”

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