India gambles on new round of NELP bidding

Noor Mohammad Delhi Hardnews

Petroleum industry experts are puzzled even while the Indian government has gone ahead with the scheduled launch of the eight round of bidding under the National Exploration Licensing Policy (NELP) regime. Given widespread recession in the economies of developed countries, foreign oil companies are unlikely to show much interest in this bidding round. In that case the government might not find any takers for the 18 deep water blocks on offer. That would be ironical given that the government often cites discoveries in deep water blocks while talking about the success of the NELP regime.

Even as global economic recession deepens and there is hardly any sign of imminent recovery in the crude oil market, the Indian government on Thursday launched the eight round of bidding for allocation of oil and gas blocks under the (NELP). In a parallel move, the government has also kicked off the bidding process for allocation of coal bed methane (CBM) blocks under the fourth round.

 This seems to be a big gamble on the part of the government given the widespread apprehension in the industry that foreign oil companies might keep away from the bidding process because of the deepening recession in their economies. If so, this would especially impact the bidding response for deep water blocks, a relatively new and challenging area in which most of Indian oil companies badly lack technical expertise for exploration. The high-profile discoveries made in Krishna-Godavari (KG) would not be possible without the participation of foreign companies.

However, Petroleum Secretary Raghaw Sharan Pandey, who announced the formal launch of this bidding round in the absence of Petroleum Minister Murli Deora, argued that the government had the option not to allocate blocks if the bidding is poor. "If response is poor, we have got the option not to allocate the blocks," Petroleum Secretary told Hardnews on the sidelines of the press conference organised on this occasion.

 As many as 70 oil and gas acreages are on offer this time while ten CBM blocks are up for grabs. In comparison, 57 oil and gas blocks were put on offer by the government in the seventh round of NELP bidding. "NELP has been a major impetus to exploration efforts in the country," the petroleum secretary said while addressing the press meet.

The 70 oil and gas acreages offered by the government under this round of the NELP bidding  include 24 deepwater blocks, 28 shallow water blocks and 18 onshore blocks. Eight of these onshore blocks are located in the state of Gujarat, two in Assam, three in Madhya Pradesh and one in Haryana.  Ten out of the 18 on-land blocks come in the category of small-sized blocks. The 70 offered blocks account for 5.2 per cent of the country's sedimentary basin.

The deepwater offshore area in the country has been opened up under the NELP bidding regime for allocation of oil and gas block. After seven rounds, the area under exploration has increased more than four times to 48 per cent of the Indian Sedimentary Basin area, from 11 per cent before the implementation of NELP regime.

Hydrocarbon reserves accretion has been more than 600 million metric tonne of oil equivalent (MMTOE). So far, 68 oil and gas discoveries have been made in 19 exploration blocks awarded under the NELP dispensation. Now, India has become the oil and gas producer from deepwater areas also.

The CBM policy has been quite successful in harnessing new alternative fuel in the form of CBM. Under three rounds of CBM, contracts for 23 CBM exploration blocks have been signed. More than 6 trillion cubic feet (TCF) reserves have already been established in four CBM blocks. The first commercial production of CBM commenced in the country from July 2007 at the rate of about 72,000 cubic metres per day, bringing India into the map of select CBM producing countries.