Ministry considers non-negotiable PSC for NELP-2

Vol 4, PW 7 (10 May 00) Exploration & Production

Oil companies continue to praise the speed with which Indian officials concluded the last NELP round, when 22 PSCs were signed on April 12th as scheduled.

Compliments may be less forthcoming if some of the measures presently being discussed in the oil ministry are enacted ahead of the next round. Petrowatch learns that much debate is underway in the oil ministry on the merits ofmaking all future PSCs non-negotiable.

The aim: to further shorten the time between award and signing. "This implies that the model PSC which will be given out at the time of inviting bids will be the final PSC and that there will be no scope for negotiations," reveals a Petrowatch correspondent, " It will be 'take-it-or-leave it situation'." He adds: "In the first round of NELP, around 20% of the clauses in the model PSC were negotiable.

The ministry discovered that these clauses took a lot of time to finalise." A senior official tells Petrowatch that if the PSCs are non-negotiable the oil ministry could award blocks less than a week after evaluation of the technical and financial bids. Important to note is that no final decision on this potentially controversialissue has yet been taken.

Some officials fear a non-negotiable PSC will discourage potential bidders. Those in favour point to oil minister Ram Naik's diktat to expedite decisions.

For this reason many bureaucrats seem inclined to give the new method a try. "We are trying to work out how to improve our system further," another official tells Petrowatch, "Not how to improve our terms, but our system - data packages, road shows, how to throw our net as wide as possible."