New Exploration Licensing Policy - Nelp - Particpations / Discoveries - Past & Present Scenario Overview

OVERVIEW Introduction of NELP  Main Features of NELP  Pre – NELP conditions  Rounds of NELP  Comparison  Future Vision  Conclusion 

INTRODUCTION 

NELP provides a level playing field in which all the parties may compete on equal terms for the award of exploration acreage.



GOI announced NELP in 1997-98 budget.



It took 2 fiscal years and 2 successive government to finalize.



The tax incentive promised to prospective investors.



After several go and halt signs by GOI, NELP finally got Underway in 1999.

MAIN FEATURES OF NELP      

Fiscal stability provision in the PSC (Production Sharing Contract ). No signature, discovery or production bonus. No customs duty on imports. No mandatory state participation. No carried interest by National Oil Companies (NOC). Freedom to the contractor for marketing of oil & gas in the domestic market.

MAIN FEATURES OF NELP

No cess on crude oil production.  Royalty to be paid on crude oil & natural gas on Volume basis.  Income tax holiday for 7yrs from start of commercial production. 

OBJECTIVES OF NELP ROUNDS Intensive exploration of Indian basins.  Opening up of acreages in ultra deep water & frontier areas.  To stimulate & promote interest and activity from a wide range of E & P players.  To bring-in new & state of art technology in exploration & exploitation.  Level playing field to all participating companies.  Transparent Bid Evaluation system . 

CHANGING SCENARIO 1945

1 Company 1 Producing Basin

1990

2 Companies 3 Producing Basins

2000

12 Companies 7 Producing Basins

2007

24 Companies 10 Producing Basins

7

NELP SCENARIO 

1945 : Burma Oil Company in Assam Shelf area



1990 : ONGC & OIL Basins : Assam Shelf , Cambay and Bombay High

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2000 : ONGC, OIL, Energy, GSPC, Essar, HOEC, Moscbacher, Okland, Poenix, Hardy, Canoro, Premier Oil, Basins : Assam Shelf, Cambay, Bombay High, Cauvery, KG, Assam Arakan Fold bed, Jaiselmer

Cairn



2007 : ONGC, OIL, Cairn Energy, GSPC, Essar, HOEC, Moscbacher, Okland, Poenix, Hardy, Canoro, Premier Oil, RIL, EnproFinance, Gazprom, Jubiliant Oil & Gas, Geo Petrol, ENI, Niko, Focus, Santos, Petrogas, Naftogaz, Prize Petroleum,



Basins : Assam Shelf, Cambay, Bombay High, Cauvery, KG, Assam bed, Jaiselmer, Barmer Sanchor, KG Deep Water, NEC

Arakan Fold

PRE INDEPENDENCE 1866-1947 

Oil exploration in India commenced in 1866 when Mr. Goodenough of McKillop Stewart company drilled a well near Jaypore near upper Assam.

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First commercial oil discovery in 1889 at Digboi.

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1893 rights were granted to Assam oil syndicated to erect a refinery and led to formation of Assam Oil Company (AOC)in 1899.

1947-1960 

After independence GOI realized the importance of Oil & Gas and framed Industrial Policy Statement of 1948.

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Top priority for development of Petroleum Companies.



Indo-Stanvac Project a JV between GOI and Standard Vaccum Oil Company of US in 1953 gave the first oil discovery of independent India near Nahorkatiya.

1947-1960 

 1.

2. 3. 4.

In 1955 GOI established ONGD (Oil and Natural Gas Directorate) with the help of GSI (Geological Survey of India). From 1958 ONGC started its exploration in: Himalayan Foothills – Ganga Plains Alluvial tracks of Gujarat Upper Assam and West Bengal Cambay Basin

1961-1991 1962 experimental seismic surveys were carried out in Gulf of Cambay.  Also western offshore survey details resulted in Bombay offshore India’s biggest commercial discovery.  In 1990 commercial oil discoveries by OIL in Rajasthan.  And Assam in 1991. 

HISTORY OF PRE-NELP ROUNDS

Exploration bidding rounds started in 1979  The initial rounds were not successful.  1st four rounds – 12 years (1979-1991)  Next five rounds in 2 years (1994-1995) 

ROUNDS OF EXPLORATION      

1st Round of Exploration – 1980 – 32 Offshore blocks 2nd Round of Exploration – 1982 – 50 Onshore and Offshore blocks 3rd Round of Exploration – 1986 – 27 Offshore 4th Round of Exploration – 1991 – 72 Blocks (39 Offshore & 32 were Onland) 5th & 6th Round of Exploration - 1993 – 45 Blocks 7th & 8th Round of Exploration – 1994 – 45 Blocks

POST INDEPENDENCE & PRE NELP ERA   

Discovery of Naharkotiya in NE in 1953 Ankleshwar in Cambay Basin in 1958 Mumbai High in Mumbai Basin in 1972  Cauvery in 1958 (Karaikal-1)  Jaiselmer sub-basin in 1958 (Manhertibba1)  Assam-Arakan yoma fold belt in 1973 (Baramura-1)  Krishna-Godavari in 1982 (Narsapur-1)

PRE NELP Number Blocks offered

Number

379

Bids received

148

Contract signed

28

400 300 200 100 0

Number

Blocks offered Bids received

Contract signed

•Pvt. Companies felt that the incentive structure designs were not attractive for the higher perceived risk

•Inordinate delays in awarding contracts (up to 2-3 yrs) •After signing contracts, it took years to obtain clearances from various agencies of the GOI & State Govt. to go ahead to start the operations

NELP I– JANUARY 8, 1999 Number Blocks offered

Number

48

Bids received

45

Contract signed

24

50 40 30 20 10 0

Number

Blocks offered Bids received

Contract signed

World class gas discovery by RIL-NIKO in 2002 in KG off shore

block  Cairn energy’s discovery in KG deep water block  Gas discovery by RIL in Mahanadi shallow water block

NELP II – 2000 Number

Number Blocks offered

25

Bids received

44

Contract signed

23

50 40 30 20 10 0

Number

Blocks offered Bids received

Contract signed

3 Discoveries were made in Cambay Basin GSPC discovered OIL & NIKO discovered natural gas

NELP III – 2001 Number Blocks offered

Number

27 60 40

Bids received

52

Number

20 0

Contract signed

23

Blocks offered Bids received

Contract signed

GSPC - jubilant - GGR consortium made world class gas discovery in KG ( KG-OSN-2001/3) offshore block in June, 2005

NELP IV – 2003 Number

Number Blocks offered

24

Bids received

44

Contract signed

20

50 40 30 20 10 0

Number

Blocks offered Bids received

Contract signed

 Provision of fast track arbitration  Higher weightage for technical and financial viability of deep water

block  Surcharge on foreign companies abolished  Bank guarantee to be returned after completion of MWP

NELP V – 2005 Number Blocks offered

Number

20

Bids received

69

Contract signed

20

80 60 40 20 0

Number

Blocks offered Bids received

Contract signed

Workstations were provided in data centers in London, Houston, Calgary & Dubai to facilitate companies

to review and analyze data.  Govt. decided to take its profit share of natural gas in cash or kind for a block of 5yrs instead of such option being made every year.  Co.’s with net worth US $500million or more not required to give bank guarantee towards MWP commitment as against the threshold limit of US $ 1 billion earlier.

NELP VI – 2006 Number

Number Blocks offered

55

200 150

Bids received

165

100

Number

50

Contract signed

19

0 Blocks offered Bids received

Check on aggressive/speculative bidding • Uniform seismic coverage of basins • Participation of E&P companies with global experience – Induction of new technology – Global knowledge – Better geological models – Better E&P practices • Better Government take

Contract signed

NELP VII 

Approximately 50 to 60 blocks have been identified for the offering.



Rajasthan Basin, Cambay Basin, Himalayan Foreland & Punjab Basin, Ganga Basin, Kutch Basin, Saurasthra Basin, Vindhyan Basin, Mumbai Offshore Basin, KeralaKonkan Basin, Purnea Basin, Bengal Basin. Mahanadi Basin, Krishna – Godavari Basin, South Rewa Basin, Palar Basin, Assam – Arakan Basin, Deccan Syneclise, Cuddapah Basin, Andaman Basin.

Expected Blocks Onland Shallow Water Deep Water Total

: 40-45 : 13-15 : 20-25 : 73-85

NELP ROUNDS OVERVIEW Blocks offered

Bids received

Contracts signed

Pre - NELP

379

148

28

NELP I

48

45

24

NELP II

25

44

23

NELP III

27

52

23

NELP IV

24

44

20

NELP V

20

69

20

NELP VI

55

165

19

NELP – A SUCCESS STORY 60

55 52

50

48

Blocks Offered Blocks Awarded

40

27

30 24

25 23

23

24 20

20

20

20

10

0

NELP-I (1999)

NELP-II (2000)

NELP-III (2002)

NELP-IV (2003)

NELP-V (2005)

NELP-VI (2006)

% of success increased with every NELP round NELP V had 100% success at this point after receiving 100% we decided to increase the blocks on offer and met with 95% success straightaway in NELP VI

COMPARISON

COMPARISION Pre-NELP (1993 –2006)–13 Yrs.

NELP-I, II & III, IV,V (2000-06)-6 Yrs.

2D Seismic Survey (LKM)

24,091

1,09,305

3D Seismic Survey (SKM)

5,304

67,773

Exploratory Wells (No.)

167

93

PSC Blocks

28

138

No. of Discoveries (Up to 15-04-2007)

25

40

Investment made on Exploration (US$ Million)

781.65

1451.18

FUTURE OF NELP 

   

Out of 90 blocks under exploration only a few of the blocks are explored through drilling Hydrocarbon potential of many blocks yet to be assessed by drilling Last Seven years of NELP opened up new areas for hydrocarbon occurrence Confidence build-up in discovering more & more oil and gas in new areas Very high chances of discovering much more hydrocarbons in country

CONCLUSION  

 

NELP is a success. India is highly under /unexplored  Possibility of striking of rich oil and gas reserves in poorly explored /unexplored older sediments quite high. Need for acquiring geo-scientific data across the country Integration of entire geo-scientific data for better geological understanding of regional & local prospectivity.

SOURCES

Directorate General of Hydrocarbons  Paper on E&P Licensing Policy – PETROFED , Price Water House Coopers (Knowledge Partners)  MoPNG 