The government will offer more than two dozen oil and gas blocks for exploration through competitive bidding under the New Exploration Licensing Policy.
As domestic demand for gas will rapidly increase, new gas sources need to be explored.
Government has put on auction the gas discovery area it snatched from Reliance Industries in KG-D6 block and the field that Cairn India is seeking to regain around its Rajasthan block.
In the past, the absence of commercially viable gas prices had not only discouraged high-risk new exploration activity but also hindered the development of some of the existing discoveries, such as the satellite fields in the Reliance Industries' eastern offshore KG-D6 block.
RIL, which has faced numerous delays in getting approvals and shifting goal-posts, said the country did not have a stable policy regime and this was responsible for exit of global energy giants like Royal Dutch Shell, BHP Biliton of Australia, Statoil of Norway and Brazil's Petrobras.
The government may marginally increase petroleum prices, petroleum secretary M S Srinivasan on Tuesday said.
Gujarat State Petroleum Corporation, the flagship company of GSPC Group involved in exploration and production, has put its public offer plans on a fast track and is aiming to hit the capital markets by May.
The Planning Commission on Tuesday called for linking petrol and diesel prices with international markets and made a case for raising gas prices by public sector companies.
Mukesh Ambani-led Reliance Industries on Tuesday said it has made the first oil discovery at an exploratory block in the Cambay basin in Gujarat.
For simplification and a sharper strategic focus, BHP Billiton has been reassessing its global assets portfolio.
The downstream segment will enjoy greater visibility on excise duty as branded petrol and diesel will now attract specific duty.
But after over $10 billion investment that yielded mostly natural gas discoveries, the finance ministry has ruled that the tax breaks would be available only to crude oil production and will not be extended to natural gas, sending the seventh NELP round in a tailspin, industry sources said. The petroleum ministry feels that withdrawal of tax holidays when substantial investment has been made in exploration activities is being viewed as the government reneging on its commitmen
Irked by a media campaign that it would earn a windfall profit of Rs 50,000 crore (Rs 500 billion) from gas fields, RIL has said the charges were timed to sabotage the government's efforts to get investments in oil sector.
The government is planning to relaunch the eighth phase of bidding for oil and gas blocks under the New Exploration and Licensing Policy (Nelp-VIII) in the second week of August.
The terms are the same as those suggested by a panel headed by Prime Minister's Economic Advisory Council Chairman C Rangarajan for awarding future oil and gas block contracts.
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The block was offered to the consortium under New Exploration and Licensing Policy (Nelp VII). RIL has 70 per cent participating interest and BP, which is the operator of the block, holds the remaining 30 per cent.
Reliance had carried out the minimum work obligation in block KK-OSN-97/2 (awarded to the company in first round of New Exploration Licensing Policy), KK-DWN-2000/1 and KK-DWN-2000/3 (NELP-II) and decided not to enter the subsequent phase, a company official said. The poor prospectivity of the basin was evident from NELP-VI round when the basin could not attract any bids for two blocks and a third block was awarded on a single bid.
The new government may also introduce a separate scheme for revival of stranded gas-based power projects
The finance ministry, in the explanatory memorandum to the Finance Bill 2008-09, proposes to withdraw the tax holiday which has been a window the petroleum ministry has been using to market the oil and gas exploration blocks under the New Exploration and Licensing Policy (Nelp) since 1999. The commitment to give a 7-year tax holiday to companies producing gas from Nelp blocks was finalised by the Union Cabinet after consultation with the finance ministry.
Once the deal is inked, the two companies will also jointly bid for exploration blocks under the ninth round of auctions in Brazil.
The MoU seeks cooperation in upstream, midstream and downstream activities.
Launching a major global initiative for attracting foreign investment in the hydrocarbon sector, India on Monday held a roadshow in London for auctioning 55 oil and gas exploration blocks.
Finance Minister P Chidambaram had, in the Budget for 2008-09, announced end to income tax holidays for refineries commissioning after April 1, 2009. The Budget also mentioned tax breaks under section 80-IB(9) would be available for production of 'mineral oil', which was defined as not to include petroleum and natural gas. This created a lot of confusion among investors and a fear of poor response took Petroleum Minister Murli Deora to Chidambaram earlier this week.
RIL has discovered more gas in Krishna offshore basin. The company has named this block Dhirubhai - 38.
Government has no role in fixing prices of natural gas produced from areas auctioned under NELP and only approves the pricing formula, petroleum ministry has told a committee of Secretaries appointed to look into the vexed issue.
Oil regulator DGH has recommended stiff penalties on state-owned Oil and Natural Gas Corp and Reliance Industries Ltd for default on commitments made by them on oil and gas exploration blocks awarded under NELP.
In an attempt to hold on to its exploration blocks in the Krishna-Godavari basin, Oil and Natural Gas Corporation is in talks with British Gas (BG) and British Petroleum (BP) for joint exploration in four offshore blocks in the region.
Ambani-owned Reliance Energy is likely to bid for potential gas bearing blocks on offer under NELP-VI
However, supermajors Chevron, ExxonMobil and Conoco Philips of US, who were expected to partner Reliance Industries, did not participate.
The Ministry of Petroleum and Natural gas is likely to reimburse Oil and Natural Gas Corporation almost Rs 850 crore (Rs 8.5 billion) for the cost of exploration and development work in pre-NELP oil fields in the past.
BG Group of UK is planning to buy stake in ONGC's oil and gas blocks.
Reliance Industries Ltd may tie-up with Chevron Corp of US to make joint bids for oil and gas blocks on offer in the latest round of New Exploration Licensing Policy.
RIL and ONGC on March 28 agreed to appoint neutral international expert to decide if four wells drilled on boundary of KG-D6 block were drawing gas from neighbouring gas discoveries of the state-owned firm.
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