The Hindu : Business : Centre invites bidding for 20 oil and gas blocks

Online edition of India's National Newspaper
Wednesday, Jan 05, 2005

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Business

Centre invites bidding for 20 oil and gas blocks

By P. K. Bhardwaj

The Union Minister for Petroleum and Natural Gas, Mani Shankar Aiyar, launching the web site of fifth New Exploration Licensing Policy (NELP-V) global open bidding in New Delhi on Tuesday. — Photo: V. Sudershan

NEW DELHI, JAN. 4. The Central Government today offered 20 oil and gas blocks for exploration and production in order to boost domestic crude oil production by 50 per cent to 50 million tonnes in the coming 15 years.

Six deep-sea blocks, two shallow water and 12 on-land blocks involving an investment of $1 billion have been offered to public and private sector firms as part of the fifth round of New Exploration Licensing Policy (NELP), the Union Petroleum Minister, Mani Shankar Aiyar, announced at a press conference.

The Government, unlike the previous four rounds when 90 blocks were awarded, is expecting this time big multinationals to turn up by May 31, largely inspired by the over 14 trillion cubic feet of gas reserves struck by Reliance Industries in the Bay of Bengal and Cairn Energy of the U.K. making a significant oil discovery in Barmer district of Rajasthan.

"Domestic crude oil production is targeted to rise to 50 million tonnes by 2025 from the current plateau of 33 million tonnes," Mr. Aiyar said. However, the over 5 per cent increase in petro-product demand is likely to outpace the incremental production planned and India's self-sufficiency ratio would fall to 15 per cent.

Quoting figures, Mr. Aiyar said that India was importing nearly 70 per cent of its crude oil requirement now and this would rise to 85 per cent by 2025. Over $2.53 billion had already been invested in the blocks awarded in first four rounds of bidding, he said adding bidding conditions had been made more attractive to attract investors.

Apart from the 20 blocks, the Oil and Natural Gas Corporation will also offer stakes in five deep-sea blocks, three in Krishna Godavari basin, one in Kerala Konkan offshore and one in Gujarat Kutch offshore, during the road-shows being organised to promote NELP blocks.

He said the Government had changed the policy of taking its share of natural gas in cash or kind every year to once in five years. The profit gas is calculated after deducting all expenses incurred on producing that gas. The Government has a fixed percentage of profit gas, which a company decides while bidding for a block.

Also the Government has relaxed the norms relating to bank guarantee towards minimum work programme. Up till now, only companies with a net worth of $1 billion were exempt from furnishing the bank guarantee. But from NELP-V this threshold value had been brought down to $500 million, he said.

Of the deep-water blocks, two each are on the east and west coast and two in the prospective Andaman area.

The shallow water blocks are on the west coast while the 12 on-land blocks are spread across eight basins — Assam, Arakan, Cambay, Rajasthan, Kaveri, Ganga valley, Vindhya, Deccan Syneclise and Krishna Godavari.

Road shows to attract investors will be held in Delhi on January 18, London (January 20-21), Dubai (January 24-25), Houston (January 31 and February 1), Calgary (February 3-4), and possibly in Moscow (February 14), he said.

Digital data rooms are being set up in Delhi, Houston, London, Calgary and Dubai.

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