OilVoice - NELP VIII Round and Fourth Coal Bed Methane Round Re-Launch

NELP VIII Round and Fourth Coal Bed Methane Round Re-Launch

Tuesday, November 03, 2009

On 8 August 2009, the Indian Ministry of Petroleum & Natural Gas (MOP&NG) re-launched the Eighth Round of New Exploration Licensing Policy (NELP VIII) and the Fourth Round of Coal Bed Methane (CBM IV).

Submission of bids for the NELP VIII and CBM IV round closed on 12 October 2009. On the same day, the Directorate General of Hydrocarbons (DGH) released the provisional results of the rounds.

Under the CBM IV Licensing Round, 26 bids were received for eight of the 10 blocks on offer. Out of these eight blocks, seven blocks received multiple bids and a single bid was received for one block. A total of 19 companies, comprising three foreign companies and 16 domestic companies, participated in this round. The provisional results of the round are as follows:

Fourth Round of Coal Bed Methane (CBM)
Coal Field	Block Name	Winner (Company/Consortium)
Raj Mahal	RM(E)-CBM-2008/IV	ESSAR OIL LIMITED
Talchir	TL-CBM-2008/IV	DEEP CH IV PVT - DEEP NATURAL RESOURCES - LANCO INFRATECH
Ib Valley	IB-CBM-2008/IV	DEEP CH IV PVT - DEEP NATURAL RESOURCES - LANCO INFRATECH
Singrauli	SR(W)-CBM-2008/IV	DEEP CH IV PVT. - DEEP NATURAL RESOURCES - SAVLA OIL & GAS - KANVEL OIL & GAS
Sohagpur	SP(NE)-CBM-2008/IV	DEEP CH IV PVT. LTD - KGN INDUSTRIES LTD.
Satpura	ST-CBM-2008/IV	DEEP CH IV PVT. LTD - KGN INDUSTRIES LTD.
North East	AS-CBM-2008/IV	DEEP CH IV PVT. - DEEP NATURAL RESOURCES - SAVLA OIL & GAS - KANVEL OIL & GAS
Wardha	WD(N)-CBM-2008/IV	NIL
Wardha	WD(E)-CBM-2008/IV	NIL
Mannargudi	MG-CBM-2008/IV	DEEP CH IV PVT. - DEEP NATURAL RESOURCES - SAVLA OIL & GAS - KANVEL OIL & GAS

The NELP VIII Licensing Round attracted a total of 76 bids for 36 out of 70 blocks on offer. Of the 24 deepwater blocks and eight onshore blocks on offer, single bids were placed for eight and two blocks respectively. Out of the 28 shallow offshore blocks on offer, 13 blocks received bids, with only four blocks receiving multiple bids. On the other hand, all 10 Type-S (area not exceeding 200 square kilometres) blocks received bids, with nine blocks receiving multiple bids. The provisional results of the licensing round are as follows:

Eighth Round of New Exploration Licensing Policy (NELP VIII)

Block Name	Basin Name	Winner (Company/Consortium)
AA-ONN-2009/1	ASSAM ARAKAN	JUBILANT OIL & GAS - JUBILANT ENERGY (KHARSANG) - JUBILANT OFFSHORE DRILLING
AA-ONN-2009/2	ASSAM ARAKAN	JUBILANT OIL & GAS - JUBILANT ENERGY (KHARSANG) - JUBILANT OFFSHORE DRILLING
AA-ONN-2009/3	ASSAM ARAKAN	ONGCL - OIL INDIA LIMITED
AA-ONN-2009/4	ASSAM ARAKAN	OIL INDIA LIMITED - ONGCL
AN-DWN-2009/1	ANDAMAN	ONGCL - OIL INDIA LIMITED
AN-DWN-2009/10	ANDAMAN	NIL
AN-DWN-2009/11	ANDAMAN	NIL
AN-DWN-2009/12	ANDAMAN	NIL
AN-DWN-2009/13	ANDAMAN	ONGCL - GSPCL- GAS AUTHORITY OF INDIA LTD.- NTPC
AN-DWN-2009/14	ANDAMAN	NIL
AN-DWN-2009/15	ANDAMAN	NIL
AN-DWN-2009/16	ANDAMAN	NIL
AN-DWN-2009/17	ANDAMAN	NIL
AN-DWN-2009/18	ANDAMAN	ONGCL - OIL INDIA LIMITED - GAS AUTHORITY OF INDIA LTD.
AN-DWN-2009/2	ANDAMAN	ONGCL - OIL INDIA LIMITED
AN-DWN-2009/3	ANDAMAN	ONGCL - OIL INDIA LIMITED
AN-DWN-2009/4	ANDAMAN	NIL
AN-DWN-2009/5	ANDAMAN	ONGCL - GSPCL
AN-DWN-2009/6	ANDAMAN	NIL
AN-DWN-2009/7	ANDAMAN	NIL
AN-DWN-2009/8	ANDAMAN	NIL
AN-DWN-2009/9	ANDAMAN	NIL
CB-ONN-2009/1	CAMBAY	ESVEEGEE STEEL (GUJARAT) PVT LTD
CB-ONN-2009/2	CAMBAY	ESVEEGEE STEEL (GUJARAT) PVT LTD
CB-ONN-2009/3	CAMBAY	HARISH CHANDRA (INDIA) LIMITED
CB-ONN-2009/4	CAMBAY	ONGCL - GSPCL
CB-ONN-2009/5	CAMBAY	NTPC LTD.
CB-ONN-2009/6	CAMBAY	HARISH CHANDRA (INDIA) LIMITED
CB-ONN-2009/7	CAMBAY	ESVEEGEE STEEL (GUJARAT) PVT LTD
CB-ONN-2009/8	CAMBAY	JAY POLYCHEM (INDIA) LIMITED - JAY POLYCHEM PTE. LIMITED
CY-OSN-2009/1	CAUVERY	BENGAL ENERGY INTERNATIONAL INC.
CY-OSN-2009/2	CAUVERY	OIL INDIA LIMITED - ONGCL
CY-OSN-2009/3	CAUVERY	NIL
GK-OSN-2009/1	GUJARAT- KUTCH	ONGCL - GSPCL- ADANI WELSPUN EXPLORATION LTD. - INDIAN OIL CORPRN. LTD.
GK-OSN-2009/2	GUJARAT- KUTCH	ONGCL - ADANI WELSPUN EXPLORATION LTD.- INDIAN OIL CORPRN. LTD.
HF-ONN-2009/1	HIMALAYAN FORELAND	NIL
KG-DWN-2009/1	KRISHNA GODAVARI	BG EXP. AND PROD. INDIA LTD. - OIL INDIA LIMITED- ONGCL - ANDHRA PRADESH GAS INFRASTRUCTURE CORP.
KG-OSN-2009/1	KRISHNA GODAVARI	ONGCL - ANDHRA PRADESH GAS INFRASTRUCTURE CORP. PVT LTD.- NTPC
KG-OSN-2009/2	KRISHNA GODAVARI	ONGCL - ANDHRA PRADESH GAS INFRASTRUCTURE CORP. PVT LTD.
KG-OSN-2009/3	KRISHNA GODAVARI	CAIRN ENERGY PTY. LTD. - CAIRN INDIA LIMITED
KG-OSN-2009/4	KRISHNA GODAVARI	ONGCL - OIL INDIA LIMITED- NTPC - ANDHRA PRADESH GAS INFRASTRUCTURE CORP.
KK-DWN-2009/1	KERALA KONKAN	NIL
KK-DWN-2009/2	KERALA KONKAN	NIL
KK-DWN-2009/3	KERALA KONKAN	NIL
KK-DWN-2009/4	KERALA KONKAN	NIL
KK-OSN-2009/1	KERALA KONKAN	NIL
KK-OSN-2009/2	KERALA KONKAN	NIL
KK-OSN-2009/3	KERALA KONKAN	NIL
KK-OSN-2009/4	KERALA KONKAN	OMKAR NATURAL RESOURCES PVT LTD - MUNROS ENERGY PVT LTD- NERIS ENRGY PVT LTD
KK-OSN-2009/5	KERALA KONKAN	OMKAR NATURAL RESOURCES PVT LTD - SUBLIME ENERGY PVT LTD- NERIS ENRGY PVT LTD
KK-OSN-2009/6	KERALA KONKAN	NIL
KK-OSN-2009/7	KERALA KONKAN	NIL
KK-OSN-2009/8	KERALA KONKAN	NIL
KK-OSN-2009/9	KERALA KONKAN	NIL
MB-DWN-2009/1	MUMBAI	CAIRN ENERGY PTY. LTD. - CAIRN INDIA LIMITED
MB-OSN-2009/1	MUMBAI	NIL
MB-OSN-2009/2	MUMBAI	NIL
MB-OSN-2009/3	MUMBAI	BHP BILLITON PETROLEUM
MB-OSN-2009/4	MUMBAI	NIL
MB-OSN-2009/5	MUMBAI	NIL
MB-OSN-2009/6	MUMBAI	BHP BILLITON PETROLEUM
MB-OSN-2009/7	MUMBAI	BHP BILLITON PETROLEUM
VN-ONN-2009/1	VINDHYAN	DEEP ENERGY,LLC - KGN INDUSTRIES LIMITED
VN-ONN-2009/2	VINDHYAN	DEEP ENERGY,LLC - KGN INDUSTRIES LIMITED
VN-ONN-2009/3	VINDHYAN	ONGCL
WB-ONN-2009/1	BENGAL	NIL
WB-ONN-2009/2	BENGAL	NIL
WB-OSN-2009/1	BENGAL	NIL
WB-OSN-2009/2	BENGAL	NIL
WB-OSN-2009/3	BENGAL	NIL

Provisional results of blocks offered under the eighth round of the New Exploration Licensing Policy (red shading). Source: PetroView®

The award of the blocks is expected to be finalised within three months and signing of contracts to be completed within four months.
Policy for Coal Bed Methane (CBM) was formulated in 1997 and a model contract and bid documents were drafted in 1998. The prospective blocks were carved in 1999-2000 and the first CBM round was launched in May 2001. To date, three rounds have been completed with the latest round announced in April 2009.

Highlights of some of the terms of the CBM policy are:
- no participating interest of the Government;
- no signature bonus;
- option to walk out at the end of Phase 1 and 2;
- freedom to sell gas in the domestic market at a market determined price; and
- Income Tax Holiday for seven years from start of commercial production.

After three rounds of CBM bidding, 26 blocks covering an area of 13,600 square kilometres have been awarded and the first commercial production from CBM commenced on 14 July 2007.

The New Exploration Licensing Policy (NELP) was formulated in 1997-1998 to boost hydrocarbons exploration in the country by providing a level playing field, where exploration licences would be granted through international competitive basis to foreign and national oil companies (NOC).

NELP was first implemented in January 1999 and to date, seven rounds have been completed with the eighth round launched in April 2009.

Some of the salient features of the NELP include:
- freedom for operators to market crude oil and gas in the domestic market at market determined price;
- up to 100% participation by foreign companies;
- no signature, discovery or production bonus;
- Income Tax Holiday for seven years from start of commercial production;
- no mandatory state participation; and
- biddable cost recovery limit up to 100%.

Under NELP, 203 production sharing contracts have been signed and multiple players are operating in Indian sedimentary basins. The area under exploration has increased more than four times from 0.35 million square kilometres in 2000 to 1.50 million square kilometres in 2009, with 70 hydrocarbon discoveries.

An issue of contention under the NELP VIII Licensing Round is the applicability of the Tax Holiday to commercial production of natural gas. In the Union Budget of 2008-09, the finance ministry defined “mineral oil” for the purpose of Section 80 IB (9) of Income Tax Act, 1961 to exclude natural gas. This meant that the Tax Holiday, one of the salient features under NELP, was only for crude oil production and not natural gas, contrary to the Government’s commitment while attracting investment under NELP.

In the Union Budget of 2009-10, the Finance Ministry clarified that the Tax Holiday available in respect of profits arising from the commercial production or refining of mineral oil, will be extended to natural gas. This tax benefit will be available to undertakings in respect of profits derived from the commercial production of mineral oil and natural gas from oil and gas blocks which are awarded under NELP VIII round of bidding.

According to the petroleum ministry, the lukewarm response to the NELP VIII Licensing Round was attributed to the global credit crunch faced by oil companies. However, some industry analysts believe the ongoing corporate battle between Reliance Industries and Reliance Natural Resources, and government intervention in the pricing and marketing of hydrocarbons, could have dampened investor interest in the latest round.