Soon, oil firms to choose blocks for exploration

Oil exploration companies may soon be able to choose the blocks they want to take up for their hydrocarbon search.

“The Government's intention is to move to the Open Acreage Licensing Policy (OALP) regime as soon as possible,” the Petroleum Minister, Mr Murli Deora, said.

Speaking at the production-sharing contract (PSC) signing ceremony for the blocks awarded in the eighth round of oil and gas blocks auction (NELP-VIII), he said, “Under this policy (OALP), companies can suggest any block on offer at any time, without waiting for the regular bid rounds under NELP. The blocks will be awarded to the party giving the best bid.”

For the OALP to become operational, the establishment of the National Data Repository (NDR) is a pre-requisite. The Directorate-General for Hydrocarbons (DGH) is in the process of setting up the NDR, which will archive all the exploration and production data under one roof.

“Certain regulations regarding ownership of data and sharing of information in the public domain will be required to be formulated while setting up the NDR. These issues are being looked into,” Mr Jitin Prasada, Minister of State, Petroleum and Natural Gas, said.

PSCs signed

Under NELP-VIII, of the 70 blocks offered, only 36 attracted bids. Bids for two blocks were rejected and 34 blocks were awarded. Out of these 34 blocks, PSCs for 31 were signed on Wednesday and the remaining will be inked later. ONGC and its consortium won 17 blocks.

PSCs were signed with 20 companies for eight deepwater blocks, 11 shallow water offshore, and 12 onland blocks. Apart from ONGC, Oil India Ltd, and NTPC, those who signed the PSC include BHP Billiton Petroleum International Exploration Pvt Ltd, BG Exploration and Production India Ltd, Cairn Energy India Pty Ltd, Bengal Energy International Inc, Esveegee Steel Gujarat Pvt Ltd, Harish Chandra (India) Ltd, Jubilant Oil & Gas Pvt Ltd, and Jay Polychem (India) Ltd.

In addition, nine companies that have participating interest with operating companies such as Adani Welspun Exploration Ltd, Andhra Pradesh Gas Infrastructure Corporation Pvt Ltd, GAIL, GSPC, and Indian Oil Corporation, also signed the PSCs.

“Considering the global economic situation, the committed investment in NELP-VIII by these companies is $1.1 billion. The actual investment made under the earlier NELP rounds stands at $13.8 billion,” Mr Deora said. The Government plans to launch NELP IX in the third quarter of 2010 and offer about 30-40 blocks.

More attractive

The Petroleum Secretary, Mr S. Sundareshan, said, “Efforts are on to make the NELP regime more attractive.” As regards clarity on whether the definition of mineral oil will include natural gas for tax purposes, he said, “We have taken up the issue with the Ministry of Finance. There can be no question of NELP-IX without tax breaks being worked out for gas as well.”

On shale gas, Mr Deora said, “We have initiated action to develop a framework for an assessment of resource potential which would lead to exploitation of this resource. Our endeavour is to put in place a policy framework in about a year's time.” Shale gas is natural gas located in shale rock areas and is far beneath the earth's surface. Shale gas is one of a number of unconventional sources of natural gas.

Source: Hindu Business line

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