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NELP-IX Exploration Blocks Bidding Round - Challenges, Shri Yogesh Garg, CEO, InfralineEnergy

The Ministry of Petroleum & Natural Gas, Govt. of India has recently announced the Ninth offer of exploration blocks under the New Exploration Licensing Policy (NELP).

Altogether 34 blocks have been put on offer, consisting of 19 Onland blocks, 7 shallow water blocks and 8 Deep Water blocks. Of the 19 onland blocks, 8 blocks are categorized as "S" type blocks. The S Type blocks are defined as small blocks with an area extent of not more than 200 sq kms and which are located in known petroliferous basins. Thus in the present Bid round ,all the eight " S "type blocks are located in Cambay basin of Gujarat.

The 7 shallow water blocks are all located in the west coast in water depths of less than 400m . Of the Deep water blocks (located in water depths of more than 400 m) , 4 are in Andaman sea area, 2 are in Mumbai offshore and one each in Gujarat-Saurashtra offshore and Kerala-Konkan offshore.

Mandatory 2D seismic API is prescribed for all the Deep Water blocks ,except one, while no mandatory 2D seismic API is prescribed for shallow water blocks. In the onland part, mandatory 2D seismic API has been prescribed for 7 blocks.( out of 19 Blocks).

Historical Background of the Blocks on offer

The following table summarises the historical background of the blocks put on offer. A look into the Tabulation , shows that most of the Blocks are Re-cycled blocks -either relinquished by earlier Operators of NELP & Pre-NELP rounds or taken away from/ relinquished Nomination areas of ONGC .

S.No. Block Historical Data Remarks
Deep Water Blocks
1 AN-DWN-2010/1 Only Basin Dockets are Available. No digital sets of Data Package
2 AN-DWN-2010/2
3 AN-DWN-2010/3
4 AN-DWN-2010/4
5 GS-DWN-2010/1 GS-DWN-2002/1 (ONGC) Partly relinquished NELP- IV
6 MB-DWN-2010/1 Relinquished ONGC Nomination area
7 MB-DWN-2010/2 MB-DWN-2000/1(ONGC/IOC) Partly relinquished NELP- II
Shallow Water Blocks
8 MB-OSN-2010/1 MB-OSN-2005/4 Re-Cycled NELP-VII
9 MB-OSN-2010/2 MB-OSN-97/4(ONGC/IOC) Relinquished NELP-I
10 KK-OSN-2010/1 KK-OSN-2009/1 Re-Cycled NELP-VIII
11 KK-OSN-2010/2 KK-OSN-2009/2 Re-Cycled NELP-VIII
12 KK-OSN-2010/3 KK-OSN-2009/3 Re-Cycled NELP-VIII
Onland Blocks
13 GV-ONN-2010/1 GV-ONN-97/1(ONGC) Relinquished NELP-I
14 VN-ONN-2010/1 VN-ONN-2005/1 Re-Cycled NELP-VII
15 VN-ONN-2010/2 VN-ONN-2005/2 Re-Cycled NELP-VII
16 RJ-ONN-2010/2 RJ-ON/6 Relinquished Pre-NELP
17 CB-ONN-2010/1 CB-ON/1 (RIL) relinquished Pre-NELP
18 CB-ONN-2010/2 CB-ON/1 (RIL) relinquished Pre-NELP
19 CB-ONN-2010/3 CB-ON/1 (RIL) relinquished Pre-NELP
20 CB-ONN-2010/4 CB-ONN-2005/1 Re-cycled NELP-VII
21 CB-ONN-2010/9 CB-ONN-2000/1 (GSPC) relinquished NELP-II
22 CB-ONN-2010/10 CB-ONN-2000/1 (GSPC) relinquished NELP-II
23 CB-ONN-2010/11 CB-ONN-2000/1 (GSPC) relinquished NELP-II

Challenges to attract Explorationists

The Four Deep Water Blocks of Andaman Sea are located in water depths of more than 2500 meters on an average. The data availability in such ultra deep waters is limited as can be visualized that only Basin Dockets are made available.

Under NELP-VIII Bid round 18 blocks were offered in Andaman sea alone The response was poor, possibly because of lack of data .The exploration in ultra deep waters is a cost intensive programme, which can be ventured by technologically advanced and financially sound Companies who have such risk appetite. In order to incentivize such E & P companies/MNCs, the prospect potential of such Deep Water blocks requires to be demonstrated in terms of Data collation and if possible by well information through drilling parametric wells.

The Kerala-Konkan Deep water or even shallow water areas have not given any encouraging results so far. It is time that some introspection be made on the hydrocarbon potential of Kerala-Konkan Basin ,particularly for pre-Basalt sedimentaries.

It is obvious that no big or Multi National Companies would be interested in Small "S" type Blocks. These are aimed to attract small medium sized companies or investors who would be willing to foray into oil & Gas exploration without having any technical qualification criteria.. Nevertheless, recent announcements regarding abolition of Tax Holiday and its replacement by Investment related Tax benefits may not attract investors.

Are NELP Terms & Conditions attractive and investor friendly?

Upstream is a specialized area and investors are high risk takers -but not gamblers. They take risks with expertise geologic knowledge, market conditions and on the basis of declared /promised policies. Indian Upstream has many "uncertainties" in Tax regime, marketing regime, fiscal stability, besides government clearances etc.

Let us introspect on some of the following concerns.

  • Is the Geological and Geophysical data robust enough to help evaluate the prospect potential of Blocks on offer-Particularly the Deep Water and Frontier Blocks?
  • Why Blocks are re-Cycled? Any critical analysis has been carried out? If so, What are the remedies /improvements suggested and implemented?
  • Are the fiscal policies enunciated in PSCs are "Stable" and consistent with declared policies in NIO
    (Denial of Tax Holiday, Gas Pricing and Utilisation Policy, Marketing Freedom & "Policy capture" by vested interests as aptly brought out by Mr TNR Rao, Former Secretary, Ministry of Petroleum)
  • Are we really keen to retain technologically advanced E & P Companies to explore our vast resources?
    (Walk out by Petrobras and Statoil!!!)
    • Global Majors have advanced Technologies and Business interests .They operate across entire value chain and look beyond E & P in their vertically integrated set up.
    • Finally, Govt. may take care to avoid boundary disputes, inaccessible areas (Defence, Sanctuaries, disputed territories etc) before offer of blocks. They send wrong signals.

We have to answer all above issues sincerely to make our NELP Rounds really attractive to Global players. It is well known that PSUs can not escape bidding for the blocks.