The Hindu : Business : ECS approves changes in NELP VII guidelines

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Thursday, Nov 01, 2007
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ECS approves changes in NELP VII guidelines

Special Correspondent

Hurdles cleared for foreign and private investment

NEW DELHI: The Empowered Committee of Secretaries (ECS), headed by Petroleum Secretary M. S. Srinivasan, has approved major changes in the model production sharing contract (MPSC) and bid evaluation criteria (BEC) for the crucial seventh round of New Exploration Licensing Policy (NELP VII).

With the stage having been set for the next round of bidding for oil and gas blocks under NELP VII in the first week of November, the changes are of significant nature and aimed at clearing hurdles in the way of attracting foreign and private investment in the oil and gas sector and setting at rest the speculation about MPSC and natural gas pricing. The Government is planning to put on offer 57 blocks as against some 80 plus being planned earlier. The ECS has approved amendments to article 21.1 stating that until such time as the total availability of natural gas from petroleum production activities in India meets the total national demand as determined by the Government, each company comprising the contractor, should sell in the domestic market in India all of the company’s entitlement to natural gas from the contract area.

Further, it approved that: “If India attains self-sufficiency during any year, the Government will advise the companies accordingly by a written notice. In such an event, domestic sale obligation will be suspended for such period as may be specified by the Government and the company will have the right to lift and export its participation interest share of natural gas during the said period, subject to any other extant policy guidelines of the Government applicable from time to time.”

Approving further changes, the ECS stated: “The formula or basis on which the prices will be determined pursuant to article 21.6 will be approved by the Government prior to invitation of price bids by the contractor for the sale of natural gas to the consumers/ buyers, within 60 business days from the receipt of the proposal or from the date of receipt of clarification. The price of natural gas arrived through the approval formula would be applicable uniformly to all consuming sectors.”

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