Uncertain future for 'Nomination' acreage

Vol 5, PW 26 (27 Feb 02) People & Policy

IN THE BAD old days ONGC and Oil India were awarded exploration acreage by what they believed was ' God-given right' - or what was officially termed 'By Nomination.' That was before the government introduced the New Exploration Licensing Policy in February 1999.

Today, with NELP firmly in place, 'Nomination' acreage is an anachronism, locking up potentially prospective blocks that need high investment. Very often ONGC and Oil India sit on their nominated acreage and do nothing, to the bemusement of private explorers ready to pump in money.

From 10th February 1999, the oil ministry stopped awarding acreage to ONGC or Oil India by 'Nomination'. Instead, existing licences were 'Regranted' till 31st December 1999.

Until now it remained unclear what would happen to this 'Nominated' acreage held after 31st December 1999. Shastri Bhawan is about to let us know.

We learn officials are examining a series of recommendations on Relinquishment Norms backdated to 1st January 2000. Under the new regime, the Directorate General of Hydrocarbons will have a key role in deciding the fate of ONGC's acreage.

Highlights below: Regrants will be awarded for 75% of the area held originally and will be for a maximum of six years In case of a lead or discovery, an extension of a maximum two years will be given for not more than 50% of the original PEL, otherwise after six years the entire area must be surrendered Regrants and extensions will be given to ONGC or Oil India only if they hand in a 'firm work programme' to the DGH for the extension sought ONGC or Oil India will have to submit six monthly progress and achievement reports to the DGH for the period of extensions DGH will appraise and evaluate the performance and achievements of both ONGC and Oil India for the extensions and 'Regrants' given to them Shastri Bhawan reckons these norms will pave the way for smooth transformation to a total NELP regime and finally to an Open Acreage System. "They are a must if we have to get more money into exploration and effectively utilise the resources of national oil companies," one official tells PETROWATCH.

Shastri Bhavan estimates $60bn of fresh investment is needed in the domestic upstream sector over the next 15 years. "This investment is beyond the national oil companies," he adds.

"There is also a feeling that ONGC and Oil India keep the good acreage and that India offers unattractive acreage with scanty data."