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The next round of oil and gas block auctions may not happen until after the general elections, with the Planning Commission asking the Petroleum and Natural Gas Ministry to not rush in now.
The Plan panel was responding to a note seeking inter-ministerial comments on the New Exploration Licensing Policy (NELP) X - Open Acreage Licensing Policy and Revenue Sharing model, said a senior Petroleum and Natural Gas Ministry official. If the government heeds the panel’s advice, the tenth round of NELP auctions may not even come up for consideration by the Cabinet Committee on Economic Affairs by the February 15 date set by Petroleum and Natural Gas Minister M Veerappa Moily.
Elections are expected in mid-April and other key Ministries are yet to respond to the note, the official told Business Line .
The fate of NELP X, also hangs in the balance due to lack of consensus on the revenue-sharing model it should offer contractors.
The Planning Commission feels the Petroleum Ministry should go with the Vijay Kelkar panel’s recommendation to continue with the current production-sharing contract regime, which allows cost recovery. That is, a contractor first recovers what it has spent before sharing the profit it makes with the Government.
However, the Finance and Petroleum Ministries feel that a production-linked system, which is more transparent, should be adopted. This is in line with the recommendations of the Rangarajan panel on production-sharing contracts. The cost recovery regime has been at the root of problems in the oil and gas exploration regime. The existing system requires a close scrutiny of costs, since there is incentive for the contractors to show higher costs The Ministry plans to launch the latest round under the Uniform Licensing Policy regime, which will allow explorers to hunt for all kinds of resources: oil, gas, coal-bed methane or shale.
The Government has so far offered exploration blocks under specific policies, such as NELP for oil and gas. It proposes to offer 46 blocks, but this number could go up to 65.
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