India invites bids in eighth NELP licensing round

India has invited operators to bid for 70 exploration blocks covering 163,535 sq km under its eighth New Exploration Licensing Policy (NELP 8) round.

Uchenna Izundu
OGJ International Editor

LONDON, Apr. 13 -- India has invited operators to bid for 70 exploration blocks covering 163,535 sq km under its eighth New Exploration Licensing Policy (NELP 8) round.

India has 24 deepwater blocks, 28 shallow-water blocks, and 18 onshore blocks on offer. Of the 24 deepwater blocks, 18 are off western Andaman, an area that is available for the first time. Deepwater blocks also are available in the Mumbai and Kerala-Konkan basin on the west coast.

For the oil and gas blocks, operators will have a 7-year exploration period and are to complete their minimum work program within 4 years.

Onshore acreage blocks are in the northeastern states of Assam (2 blocks) and Manipur (2), the eastern state of West Bengal (2), the central state of Madhya Pradesh (3), the western state of Gujarat (8), and the northern state of Haryana (1).

For coalbed methane acreage (CBM IV), the government has offered 10 blocks covering 5,000 sq km. These are within the states of Assam (1 block), partly in Chhattisgarh and partly in Madhya Pradesh (1), Jharkhand (1), Madhya Pradesh (2), Maharashtra (2), Orissa (2), and Tamil Nadu (1).

Bidding for both CBM IV and NELP 8 will end on Aug. 10, with production-sharing contracts to be signed within 4 months.

However operators are worried over the lack of clarity on tax issues as the finance ministry has stopped a 7-year tax holiday for gas production from blocks awarded under NELP. According to reports from India, officials from the petroleum ministry are in discussions with the finance ministry to work out a solution as oil and gas should have a level playing field.

Oil Secretary RS Pandey said it was better to proceed with the licensing round amid the global economic slowdown to generate economic activity. He added, however, that if there was little interest, India may hold onto the blocks. If there is sufficient interest, another 30-40 blocks would be offered in the next phase, he said.

"This is the best time to get exploration assets," said VK Sibal, India's upstream regulator. "It will be available more easily. So, I think medium-to-aggressive bidding [will be] there."

India, however, has only offered one block in the Krishna Godavari basin, off India's east coast where Reliance Industries discovered large gas reserves 6½ years ago. Production started last week from the Dhirubhai 1 and 3 discoveries in the Bay of Bengal.

At peak production, it will produce over 550,000 boe/d. The gas is delivered to the onshore facility at Gadimoga, a small village in the East Godavari district of Andhra Pradesh. It flows to the East West Pipeline of Reliance Gas Transportation Infrastructure Ltd.

Since NELP was introduced in 1999, India has made 68 oil and gas discoveries in 19 exploration blocks.

Contact Uchenna Izundu at uchennai@pennwell.com.

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