British Gas and Niko notable losers in NELP-IV

Vol 7, PW 17 (05 Nov 03) Exploration & Production

When oil minister Ram Naik announces the NELP-IV winners, British Gas, Niko Resources, Canoro Resources and Zarubezhneftegaz of Russia will not be on the list.

British Gas stayed away from the three previous NELP rounds and made its maiden entry into the Indian exploration sector with two deepwater bids for this round: one western offshore KK-DWN-2002/2 off the Kerala-Konkan coast and the other eastern offshore NEC-DWN-2002/2 off India's north-eastern coast. BG bid with GAIL for KK-DWN-2002/2and bid alone for NEC-DWN-2002/2.

Sadly, it won't win either. At KK-DWN-2002/2, the only other bidder, ONGC with Hindustan Petroleum, scored 45 points with its 'Phase-I' work programme against a miserable 14.49 points by British Gas and GAIL.

This was the crucial ranking that lost BG and GAIL the block. On the other parameters (technical and financial capability, 'Phase-II' and 'Phase-III' work programmes and the fiscal package) the two consortia were close.

ONGC finished first with 97.84 points and BG scored 64.6 points. BG's performance at NEC-DWN-2002/2 - which had five bidders - was even worse.

Here too, ONGC beat everybody with a far superior 'Phase-I' work programme, scoring 45 points against BG's 'Phase-I' work programme of 2.74 points - the lowestfor this block. BG finished last in the race with 44.33 points.

Here too, the 'Phase-I' work programme was critical. Niko's exclusion from the list of winners is bizarre.

At block MN-DWN-2002/3 in the Mahanadi Basin, Niko was the highest of three bidders for 'Phase-I' and scored 45 points - far ahead of ONGC (13.84 points) and Reliance with Hardy (0.75 points) and finished with a total 87.67 points. Niko should have been declared winner, but the DGH rejected its bid on the dubious grounds that because Niko's net worth of $97.34m for 2002 was below the total estimated 'Phase-I' expenditure of $127.6m it wouldn't be able to finance the work programme.

Accordingly, second ranked bidder ONGC, will win MN-DWN-2002/3 by default. Niko also failed in its bids for AA-ONN-2002/1 and offshore deepwater block NEC-DWN-2002/2.