Ninth round of NELP gets under way

India on Friday kicked off the eleventh round of auctioning under the New Exploration Licensing Policy (NELP), offering 34 oil and gas blocks, including eight deep water ones – this time without tax exemptions to investors. This is almost half of what was on offer in the previous round last year.

''The New Exploration licensing Policy round IX is being launched in the background of positive economic conditions, including revision of the administered price mechanism (APM) gas price and market determination for price of petrol,'' petroleum and natural gas Minister Murli Deora told reporters at the launch programme in New Delhi.

The 34 blocks, which include 15 recycled blocks, are made up mostly of previously discarded areas. They cover a sedimentary basin area of 88,807 sq km. The deadline for making a bid for the blocks is 16 March 2011. The previous eight rounds of NELP in 235 blocks have fetched an investment of around $14 billion.

"Out of 34 blocks, 19 blocks are totally new areas - seven in deep sea, two in shallow waters and 10 onland blocks. The remaining 15 (one in deep water, five in shallow water and nine onland blocks) are recycled blocks," Deora said.

Of the recycled blocks, five are discards of state-owned Oil and Natural Gas Corp (ONGC), the largest bidder in the previous eight rounds of NELP. ONGC relinquished the areas it had won in first and second round of NELP, after it made no discovery.The IX round of auction comes amid indications that the government is doing away with tax incentives under the new Direct Tax Code (DTC) proposed to be implemented from 1 April 2012.

''Investors basically want clarity in NELP IX. The position is absolutely clear,'' petroleum secretary S Sundareshan said. The DTC, once in force, would apply to all production sharing contracts in the future including under NELP IX, he added. Till it does, the production sharing contracts will be governed by the existing income-tax laws.