A high-level panel of secretaries has recommended to reject bids by Reliance Industries and state-owned Oil and Natural Gas Corp (ONGC) for the Andaman sea block as they had offered “very low” profit share to the government.
RIL, which had bid for six out of the 34 areas offered for exploration under the ninth auction round of New Exploration Licensing Policy (NELP) earlier this year, was ranked number one for the Andaman deep sea blocks, AN-DWN-2010/3 and AN-DWN-2010/4, ahead of a consortia of ONGC and Oil India Ltd.
An Empowered Committee of Secretaries, which reviewed the bids recently, felt that 10.95 per cent profit share offered by RIL was less than benchmark 15 per cent and therefore was deemed very low, sources privy to the deliberations said.
ECS in its recommendations, which would go to the Cabinet Committee on Economic Affairs (CCEA), opined that RIL should not be awarded these two blocks, they said.
The panel had given the same opinion on ONGC’s 6.7 per cent profit share offer for two other Andaman Sea block AN-DWN-2010/1 and AN-DWN-2010/2, where it was the sole bidder.
It also wanted the bid by a consortium of ONGC-OIL and GAIL for deep sea block GS-DWN-2010/1 and that of ONGC-OIL-BPRL for Kerala-Konkan deepwater block KK-DWN-2010/1 also rejected as they offered very low profit share.
RIL lost out to lesser known companies on the four Gujarat and Rajasthan onland blocks it had bid for.
Sources said ECS recommended award of only 14 out of the 33 blocks that had received bids. Of the 33 blocks, three in Mahanadi basin off the Orissa coast were to be shelved as they fell in Naval firing/exercise areas.
The panel recommended award of two shallow water and two onland blocks to consortia led by ONGC. State-owned OIL led consortia was adjudged winner for two onland blocks in the Assam-Arakan basin. Deep Energy walked away with two Cambay basin blocks while Focus Energy beat RIL to bag an area in Rajasthan.
The remaining five blocks were recommended for award to companies like Sankalp Oil and Natural Resources, Pratibha Oil and Natural Gas Pvt Ltd and Pan India Consultants.
The government had offered eight deepsea blocks, seven shallow water areas and 19 onland blocks for bidding in NELP-IX. One shallow water block did not receive any bid at the close of bidding on March 28.
The ECS recommended rejection of single bids for eight blocks where profit petroleum offered to the government ranged between 6.6 to 6.7 per cent.
It sought assessment of networth of top bidder for three blocks in Cambay and Rajasthan before awarding them.