Another NELP round but who will bid?

Vol 16, PW 11 (13 Dec 12) Exploration & Production

After the sorry spectacle of NELP-IX you wonder how the DGH has the stomach to launch another licensing round.

But believe it or not DGH officials are preparing to launch NELP-X by November next year (2013). “We will offer 70 blocks in NELP-X,” a senior DGH source tells this report.

“Twenty could be onshore, another 25 in shallow water and 25 will be in deepwater.” He adds the DGH will offer blocks across all India’s offshore basins on the east and west coasts, and the Andaman Islands.

But first the DGH awaits the green light from oil minister Veerappa Moily, which should come in February, once a new oil secretary replaces Girish Chaturvedi, who retires on January 31. “By end-December the ministry will also receive recommendations from the Rangarajan committee examining how to structure future PSCs,” we hear.

One matter under consideration is whether to replace the current ‘cost recovery’ regime in the PSC with a CBM-style ‘production linked payment’ regime. There are also PSC timeframe problems to resolve.

After the green light from Moily, the DGH will approach the defence and environment ministries for blocks identified in the KG basin. Roughly half the 70 blocks are re-cycled from earlier rounds or relinquished.

“An operator might have been unsuccessful in finding hydrocarbons,” we hear, “but that doesn’t mean a block is useless.” News of the approaching licensing round is welcomed by oil operators, including Reliance.

“It is good to offer acreage even if there is a slowdown,” says a source. “If the DGH doesn’t continually offer blocks the industry will shut down.

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