Before the next round, the government needs to cap the windfall profits coming out of global prices shooting up.
The government's decision not to extend the tax holiday on exploration of oil blocks being offered in the ninth round of bidding under the New Exploration and Licensing Policy (Nelp) may impact the current bidding process, of Nelp-IX.
The government is offering a total of 70 oil and gas blocks under NELP-VIII and 10 blocks have been offered under CBM-IV.
Minister of State for Petroleum and Natural Gas Jitin Prasada, who led the roadshows in the US and Canada, said the roadshows for 70 blocks offered in NELP-VIII and 10 coal bed methane blocks received overwhelming response from investors.
The eighth round of New Exploration Licensing Policy ended on October 12 attracting bids for 36 out of the 70 areas that had been offered.
The shortage of drilling rigs across the world is likely to delay the seventh round of auction of oil and gas blocks, under the New Exploration and Licensing Policy, till October-November this year.
Under the first six rounds of NELP, a total investment of $8.3 billion in exploration of oil and gas was committed, out of which about $4.5 billion has already been incurred on exploration and $1.4 billion on development of discoveries. A further $1.5 billion exploration spend is budgeted for NELP VII.
The government will next week launch the 9th round of auction under the New Exploration Licensing Policy for the oil and gas sector.
Of the 10 coal bed methane blocks on offer, bids were received only for 8. RIL bid for one block. Of the 24 deep water blocks on offer, bids were received only for eight.
The first of the promotional roadshows for 70 blocks offered under the eighth edition of New Exploration Licensing Policy and 10 coal-bed methane areas will be held in Mumbai on August 8, a petroleum ministry official said. On April 9, India launched the eighth round of auction to give away blocks for exploration under NELP with August 10 being the last date for bidding. But it was deferred over ambiguity on tax holiday for natural gas.
Fearing investor backlash on ambiguity over tax holiday for natural gas, India on Friday deferred roadshows for the largest-ever auction of oil and gas blocks and the new dates would be worked out after elections.
The decision comes after Australian mining major BHP Billiton said it would not improve the terms of its bid. BHP Billiton, the largest mining company in the world, and new entrant GVK Oil and Gas were the sole bidders for five deepwater blocks and hence the provisional winners after the bidding closed on June 30 this year.
The government on Monday received 181 bids from global and domestic oil majors, including ONGC, Reliance Industries, Essar, BP Plc and BHP Billiton, for oil and gas exploration blocks under the seventh round of NELP auction.
The state-run Oil and Natural Gas Corporation has walked away with bulk of the 21 oil and gas exploration blocks in the fourth round of new exploration licensing policy.
In a move that may boost the Indian hydrocarbon industry and bring more investments into the sector, the Union Cabinet on Wednesday decided to give marketing freedom to domestic crude oil producers, allowing them to sell petroleum to any company in the local market. The move is set to be beneficial for major crude oil producers, such as state-run Oil and Natural Gas Corporation (ONGC) and Oil India, and private sector majors like Vedanta's Cairn Oil and Gas and Reliance Industries. As of May 31, India was dependent on imports for 86 per cent of its crude oil consumption; domestic production sufficed the remaining 14 per cent demand.
Petroleum Minister Murli Deora launched the ninth edition of New Exploration Licensing Policy, offering 34 exploration blocks, almost half of the previous round in 2009.
A joint venture of Adani Group and Welspun Enterprises Ltd has discovered natural gas reserves in an area off the Mumbai coast, the two firms said in a statement Monday. The first-ever gas discovery was made in the NELP-VII block MB-OSN-2005/2, Adani Welspun Exploration Ltd (AWEL) said. Spread across 714.6 square kilometers, the block is located in the prolific gas-prone Tapti-Daman sector of the Mumbai Offshore basin where production is already underway by other operators.
Anil Ambani group on Monday said the oil ministry's interference in marketing and pricing dampened investor interest in India's auction of oil and gas blocks and its chairman had warned the Prime Minister about the same.
The retrospective tax controversy was highlighted by Vodafone, but Cairn Plc's continuing problems point to the impact this law has had on FDI in India's oil and gas sector.
The company is withdrawing from the blocks due to delays in clearances.
Cairn India, whose success in Rajasthan may have propelled Reliance to bid for two blocks in the state, has submitted offers for only two blocks -- one onland and one offshore.
First right of refusal may be limited to firms working under NELP, leaving out pre-NELP blocks run by big firms such as RIL and Cairn India.
India on Wednesday announced auction of 46 small discovered oil and gas fields, holding about Rs 70,000 crore worth of hydrocarbon reserves.
In a bid to attract "big oil" to India, the government is close to finalising an Open Acreage Licensing Policy, which gives companies a round-the-year window to pitch for oil and gas in blocks of their choice.
After awarding oil and gas blocks under NELP-VI, the government is now turning its focus to the seventh round of the New Exploration and Licensing Policy (NELP-VII).
The government nod to Reliance Industries selling 30 per cent stake in its oil and gas blocks such as eastern offshore KG-D6 to London-based BP Plc for $7.2 billion hinges on no-objection certificate (NOC) from Canada's Niko Resources and UK's Hardy Oil and Gas.
The higher MAT and confusion over whether its gas is eligible for a tax holiday have hurt the stock.
With 4,00,000 sq km in acreage and over 100 blocks to be awarded, Nelp VIII is touted as India's biggest-ever auction of oil and gas blocks. Industry observers say there is a strong case for the government to postpone the Nelp VIII, keeping in account the present liquidity situation and low crude oil prices. "It will make sense to postpone Nelp VIII as a lot of exploration and production companies are re-looking at their investment strategies," said a sector expert.
The last date for bidding is being pushed back from April 25 to May 9 to allow Finance Minister P Chidambaram to clear the air on the seven-year income tax holiday for oil and gas production, when he replies to Finance Bill in Parliament in next couple of week, officials said. "There is no formal decision yet, but this is the line of thinking and an announcement is likely soon," an official said.
The allotment is expected to attract investments of $1.5 billion, around 57 per cent less than the $3.5 billion commitment for the 52 blocks awarded under the previous auction. ONGC and its partners bagged the maximum number of 20 blocks in the seventh round, which closed on June 30. Australian mining major BHP Billiton and its partner GVK Power, bidding for the first time, won seven deepwater blocks.
India expects to attract at least $4 billion of investment in oil and gas hunt in the seventh round of auction of acreage under New Exploration Licensing Policy (NELP) which was launched on Thursday.Petroleum Minister Murli Deora announced the offer of 57 oil and gas blocks - nine in shallow water, 19 in deep-sea and 29 onland, in NELP-VII, bids for which will close on April 11, 2008.
With foreign investment almost drying up in India's oil and gas sector, Petroleum Minister Dharmendra Pradhan has promised an overhaul to make policies predictable, transparent and fair to investors.
The government was planning to come up with a new fiscal model giving 'special incentives' for fields that were given out on nomination to ONGC and Oil India, reports Shine Jacob.
The Petroleum Ministry in an order on Wednesday said it has revised guidelines for allocation/supply of domestic natural gas to city gas distribution entities for CNG and piped cooking gas sector.
He added every dollar rise in the gas price will result in Rs 4,000 crore of revenue and Rs 2,300 crore in profit after tax.
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