Govt to launch seventh round of oil

New Delhi, Dec 12 (UNI) The government will launch the much-delayed seventh round of New Exploration Licencing Policy (NELP) for 57 blocks tomorrow.

However, industry sources say doubts still persist as to whether the government has learnt from its experiences in the earlier rounds.

The sixth round of NELP allocation was mired in controversy and litigation, which led to several delays including the Reliance Industries Ltd's (RIL) gas pricing row.

The seventh round will see 57 exploration blocks being offered in the auction, which will close on April 11, 2008.

Out of these acreages, nine are in shallow water, 19 in deep sea and 29 on land.

The seventh round has been delayed due to a host of issues, including a dearth of operational rigs, poor rig supply, soaring charter rates and pending clearances from the ministry of environment and forests, as well as the ministries of coal and defence. In February last year, the government had awarded 52 blocks under NELP-VI. Altogether, it had awarded has so far awarded 162 blocks, under its new licencing policy which was introduced in 1999. Currently, India imports 70 per cent of its crude oil requirement.

After due deliberations with the Law Ministry and companies, the Ministry of Petroleum and Natural Gas (MoPNG) has deciced to do things differently.

The most importatant change in this round will be that ''the price discovery process on arms length basis will be adopted in the future NELP contracts only after the approval of the price formula by the government.'' The Empowered Committee of Secretaries (ECS) has recently approved the modified terms of the round, The formula or basis on which the prices will be determined, will be approved by the government prior to invitation of price bids by the contractor for sale of natural gas to consumers/buyers within 60 days of receiving the proposal.

Also, the price of gas arrived at through the approved formula will be applicable uniformly to all the consuming sectors.

Another significant change in the round will be in the export of oil and gas produced from the blocks offered under NELP-VII.

For the first time, the production sharing contracts of these blocks will incorporate a clause, as per which, if India attains self-sufficiency in crude oil and natural gas, during any year, the companies will have the right to lift and export their share of oil and gas.

However, if self-sufficiency ceases to exist, the position will revert to domestic sale obligation. Past experience and production will give the bidders extra mileage.

The ECS has also approved the recommendation made by the Directorate General of Hydrocarbons (DGH) that well depth should continue to be a biddable item under NELP-VII as was in NELP-VI.

UNI