State-run Oil India (OIL) has secured an extension for petroleum exploration licences (PELs) for 10 of its 16 independently held blocks in Assam and Arunachal Pradesh.
The company has, however, been asked to surrender five blocks, according to a company official. OIL had in 2009 written to the Ministry of Petroleum and Natural Gas, seeking extension of PELs for 15 of its 16 nomination blocks. "The ministry granted us PELs for 10 blocks after they saw our work programme. It, however, asked us to surrender the other blocks, which do not hold much potential," an OIL official told Business Standard. Through these blocks, OIL held a total area of approximately 5,367 sq km. Having posted a six-fold jump in its net profit at Rs 431 crore for the quarter ended March 31, it plans to spend around Rs 2,300 crore as on exploration and production this financial year "This extension will allow us to carry on with our exploration activities in these blocks. Had these not been granted, our business could have been adversely affected," the official added. OIL produced 3.6 million tonnes of crude in the year, a 3.3 per cent increase over 2008-09. It also produced 2.4 billion cubic metres of gas during the period, 6.4 per cent more than last year. The company added around 9.7 million tonnes of new hydrocarbon reserves in 2009. All of its current reserves, estimated at around 42 mt, are in Northeast India.
With the recent revision in administered price of natural gas from $1.79 to $4.2 per unit, OIL is expecting an upward revision in the company's top line by Rs 500 crore a year and net profit by Rs 315-340 crore. The company produces two billion cubic metres of natural gas a year, of which around 85 per cent is sold at administered prices. Gas sold to power and fertiliser customers in the northeast is given a 40 per cent subsidy.