'Major natural gas prod from KG basin by July'

Mumbai, Jan 8: Under the New Exploration Licensing Regime (NELP) Major natural gas production in the Krishna Godavri (KG) basin is likely to commence from July this year, Union Petroleum and Natural Gas Minister Murli Deora said today.

Mr Deora inaugurated the first-ever Road Show to kick start the seventh round of the NELP, here today. ''Major gas production in KG basin is likely to commence from July 2008, at the rate of 40 mmscmd with peak production of 80 mmscmd,'' the Minister said, in his address during the inauguration ceremony.

Inviting all the exploration and production companies to participate in the bidding process and become a partner in India's energy security, Mr Deora said, ''The government is committed to complete evaluation, award and signing of production sharing contracts in a strict time frame.'' ''It would be our endeavor to complete the whole process in a transparent manner as demonstrated in the past rounds of the NELP,'' he added.

The bid closing deadline for the NELP-VIIth is April 11. Under this round of the NELP, the Government is offering 57 blocks, the highest ever number so far, with sedimentary coverage of 1.71 sq. km.

The offered blocks comprises 19 deep waters blocks, 9 shallow water and 29 on-land blocks.

In the previous six rounds of NELP, 25 foreign countries including British Gas, Cairn Energy and Premier Oil (UK), Canaro and Naiko of Canada, ENI (Italy), Gazprom (Russia) etc have been awarded a total of 37 blocks.

The total investments in all the six NELP rounds so far are about USD8.3 billion.

Mr Deora said the government had endeavoured to make the NELP regime even more attractive both for the domestic and the foreign companies and the process had been reviewed in full consultation with the stake holders. ''We have also translated our NELP experience into evolving investment policy in the E &P sector which today permits 100 per cent Foreign Direct Investment,'' he said adding that the success of the policy, which had attracted investment, including FDI, had been demonstrated by the commitment of 8.3 billion dollar in exploration and production of hydrocarbons in NELP.

However, Reliance Petroleum, which has emerged a major player in the sector outside the government-owned companies, felt there was need for little tweeking in the NELP policy which gave more weightage to foreign companies with regard to experience in deepwater exploration which has 19 blocks in NELP VII. Company CEO P M S Prasad speaking on the sidelines of the roadshow said the government should also consider the deepwater production capability of domestic companies.

He was obviously referring to the Krishna-Godavari basin where Reliance Petroleum would start production in one of the discoveries from the middle of this year with a peak capacity of 80 million cubic metres of natural gas.

Mr Prasad, during the presentation of the Company at the road show, said there was no time or cost over-run in the project estimated to cost around USD 5.2 billion and the production cost would be around just five dollars per barrel equivalent oil.

Various companies already participating in the sectors, including ONGC, British Gas, India, Cairn Energy besides Reliance made presentations at the roadshow highlighting the bankable propositions of these blocks and also the success encountered by them from the previous six NELPs. Director General of Hydrocarbons V K Sibal said, only 21 per cent of the sedimentary basinal area had been extensively explored, Out of 26 sedimentary basins covering an area of 3.14 million sq km, exploration had been initiated in 15 and the prognosticated resources amount to 205 billion barrel (only from 15 basins).

UNI