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Lifting all restrictions, the Ministry of Petroleum & Natural Gas, in the 10th edition of the oil and gas blocks auction unveiled at Petrotech 2014, has proposed to allow explorers to hunt for all kinds of resources — oil, gas, coal bed methane, or shale.
Till now the country has been offering exploration blocks under specific policies: New Exploration Licensing Policy (NELP) for oil and gas, and CBM Policy for coal bed methane.
In other words, NELP X will be offered under the Uniform Licensing Policy of hydrocarbon acreages with a new contractual system and fiscal model.
A senior Petroleum Ministry official told Business Line that “this is the first round where we are allowing the contractors to explore all types of hydrocarbons.”
This new development is in keeping with what the explorers have been seeking.
They argue that when drilling is done, one does not know whether there is oil or gas underneath.
Besides, there are oil and gas producing areas which have shale prospects also. But, under the current dispensation exploiting it is not allowed.
The proposal is to offer 46 blocks in this round, but this number could increase to 60-65, Petroleum and Natural Gas Minister M. Veerappa Moily said. However, no clarity was available on what the fiscal regime will be for the contractors.
Of the blocks on offer, 17 are onland, 15 shallow water, 14 deepwater blocks. These are spread across the country in Gujarat-Kutch, Kerala Konkan, Cauvery, Krishna-Godavari and Deccan Syneclise.
The Minister said production-linked revenue sharing (the proposal of the C. Rangarajan Panel) is under consideration. However, the Government will also take a view on the Vijay Kelkar Committee suggestion that voted for the the existing cost recovery model.
On whether the blocks being put on offer are from the relinquished areas of the existing blocks awarded under the previous NELP regime, a Ministry official said: “Yes. But, we have not worked out how many are such blocks.”
“The blocks which we have offered are those which do not currently have hydrocarbon discoveries of commercial significance. All these blocks have good hydrocarbon prospectivity, but not have commercially successful discoveries. Otherwise, the existing contractors would not have relinquished them,” the official explained.
Chinese firms welcome The Petroleum Ministry has no plan to bar Chinese companies from participating in the auction. “We have no plan to ban anyone. It’s for the Home Ministry to decide and they have not informed us of anything on these lines,” Petroleum Secretary Vivek Rae told reporters. “We want companies to find more oil and gas,” he added.
In order to attract more explorers to the auction, the Ministry is seeking a 10-year tax holiday for ultra deep water exploration, Rae said. “We are discussing it with the Department of Revenue.” Currently, the tax holiday is granted for seven years.
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