The Cabinet Committee on Economic Affairs (CCEA) today approved the award of 44 oil and gas exploration blocks under the seventh round of auction of the New Exploration Licensing Policy (Nelp-VII). The allotment is expected to attract investments of $1.5 billion, around 57 per cent less than the $3.5 billion commitment for the 52 blocks awarded under the previous auction.
Of the 45 blocks that received bids in the seventh round of Nelp-VII, the CCEA did not award a deepwater block in Mumbai basin as it found the bid too low. Cairn was the sole bidder for this block.
Oil and Natural Gas Corporation (ONGC), India’s largest oil and gas producer, and its partners bagged the maximum number of 20 blocks in the seventh round, which closed on June 30. Australian mining major BHP Billiton and its partner GVK Power, bidding for the first time, won seven deepwater blocks.
Reliance Industries, India’s largest company by market capitalisation, in partnership with British Petroleum, the world’s third largest oil company, won one block in the Krishna-Godavari basin off the Andhra Pradesh coast.
Minister of State in the Prime Minister’s Office Prithviraj Chauhan told reporters after the CCEA meeting that the production sharing contracts for the 44 block would be signed in a month.
“It is expected that the award of the blocks under Nelp VII will result in more discoveries, further investments in development of oil fields and eventually, production of oil and gas,” he said.
The government had offered 57 oil and gas exploration blocks under Nelp VII. However, 12 blocks did not receive any bids. Officials with oil companies and the petroleum ministry said that the 12 blocks did not receive any bids as oil companies were not sure if they would be eligible to claim a seven-year income-tax holiday for the oil and gas they produce from blocks under the Nelp rounds. Earlier this year, the finance ministry had withdrawn this benefit for gas production but allowed it for oil. The petroleum ministry had also issued a clarification in this regard in June this year, three days before the bidding closed.
| NELP SO FAR | |||
| Blocks offered | Blocks bid for | Bids received | |
| Nelp I | 48 | 28 | 45 |
| Nelp II | 25 | 23 | 44 |
| Nelp III | 27 | 24 | 52 |
| Nelp IV | 24 | 21 | 44 |
| Nelp V | 20 | 20 | 69 |
| Nelp VI | 55 | 52 | 165 |
| Nelp VII | 57 | 45 | 181 |
The CCEA today also allowed the petroleum ministry to issue the tax holiday clarification as an appendix to the production sharing contracts for Nelp VII.
Many of the blocks put for auction under Nelp VII received single bids. Analysts say that since almost 80 per cent of the total number of blocks on offer were “recycled” from previous Nelp rounds, companies were not confident of making discoveries.
Government officials, however, cite numbers to prove that the Nelp VII round was successful. “181 bids were received from public sector and private/foreign companies for 45 blocks (12 deepwater blocks, 7 shallow-water blocks and 26 on-land blocks). A total of 95 companies, including 74 Indian companies and 21 foreign companies, had submitted bids for 45 blocks,” the petroleum ministry said in a statement.
“This round drew the maximum number of bids per blocks,” said an official in the ministry.
The government had offered 55 blocks in Nelp VI and got bids for 52. Winners of the blocks had also committed $3.5 billion investments for data collection and exploration in these blocks.
