New Exploration & Licensing Policy-VII

Oil and Natural Gas Corporation Ltd will be the operator for the maximum acreage awarded in the seventh round of bidding under the New Exploration & Licensing Policy (NELP-VII), a special study by Projectmonitor indicates. The Cabinet Committee of Economic Affairs recently approved the award of 44 out of the 57 blocks offered under NELP-VII that was launched in December last year. Formal production sharing contracts with the winning companies are scheduled to be signed within a month. An investment of $1.5 billion is likely to be made in phase-I of exploration.
The public sector exploration company will be the operator for 18 out of the 44 blocks awarded. The acreage under the company's operatorship will be 65,601 sq. km, accounting for 54 per cent of the total 1.21 lakh sq. km awarded. While ONGC has won most of its blocks on a single bidder basis, it has partners like Oil India Ltd, Gujarat State Petroleum Corporation Ltd, Tata Petrodyne Ltd, HPCL-Mittal Energy Ltd in the others. Except for one deepwater block in Rajasthan (RJ-ONN-2005/3), it has claimed operatorship in all the blocks that it has won.
NELP-VII was significant in that it was for the first time that small blocks (with area less than 200 sq. km) were offered with a view to encourage participation from small and medium exploration companies. The effort appears to have paid off with medium-sized companies (including debutants) like Omkar Natural Resources Pvt. Ltd, Vasundhara Resources and Mercator Petroleum Pvt. Ltd now contributing to India's petroleum exploration endeavour. In fact, small blocks, mainly in the Cambay basin, were the most sought after with two blocks CB-ONN-2005/5 and 7 attracting 17 bidders each.
The overall success ratio of NELP-VII, in terms of acreage, was 71 per cent. Out of the total 1.71 lakh sq. km offered under 57 blocks, around 1.21 lakh sq. km was awarded through 44 blocks. Developers, it appears, shied away from deep water blocks. Out of the 12 blocks that did not find takers, seven were deepwater water ones. In fact, all the four blocks aggregating 24,052 sq. km offered in the Gujarat-Saurashtra basin failed to enthuse developers. Similar was the case with some deepwater blocks in the Mumbai and Krishna-Godavari basins.
The MB-DWN-2005/8 deepwater block in the Mumbai basin was not awarded to the sole bidder-a consortium of Cairn Energy India Ltd and Cairn India Ltd-as it did not clear the composite evaluation criteria. A government statement said that the block was not awarded as doing so "would be detrimental to the government's interest in future in terms of profit petroleum." For the Scottish energy major that has enjoyed success in India's energy sector with significant discoveries, including on-land crude oil discoveries in Rajasthan, NELP-VII proved ineffective.
Mukesh Ambani's Reliance Industries Ltd, which had dominated proceedings in NELP-VI, appeared subdued in the current round. It won only one block—a 1,950 sq. km deepwater block in the prolific KG basin—in consortium with operator-partner BP Exploration (Alpha) Ltd. Details of the blocks that RIL bid for are however not available.
Infrastructure major GVK Group made its debut in the petroleum sector. In consortium with BHP Biliton Petroleum International Pty Ltd (also the operator), the Hyderabad-based group won seven deepwater blocks, including six in the Mumbai basin and one in Kerala-Konkan, aggregating around 34,500 sq. km.
Bids for NELP-VII were opened on June 30. A total of 181 bids were received for 45 blocks (12 deepwater, 7 shallow water and 26 on-land). Altogether 95 companies, including 21 foreign companies, participated in the bidding process.

Highlights of NELP VII

u 57 blocks offered, 44 awarded
u 12 blocks find no takers, one bid rejected
u Gujarat-Saurashtra basin fails to attract bids
u Around 70 per cent of total acreage offered awarded
u ONGC wins maximum acreage, operatorship
u Medium developers make most of small on-land blocks in Cambay basin
u Production sharing contracts to be signed in a month
u $1.5 billion investment expected in the first phase of exploration