First New Exploration Licensing Policy (NELP) Promotional Roadshow Held in Mumbai
Release Date: 2010-10-25
October 18th, 2010, Trident Hotel, Mumbai, India - The first promotional Roadshow was held to endorse the 9th round of the New Exploration Licensing Policy (NELP). The NELP is the official bidding paradigm offered by the Indian government to award new geographic blocks for oil and gas (O&G) exploration; in this round, 34 regions are up for bidding, from 10 sedimentary basins, across both land and sea. The conference brought together national O&G sector officials, and 112 interested parties, including Exploration & Production (E&P) companies, O&G service providers, financial institutions, and related organizations.
The Roadshow was the third in a series of events to inaugurate this 9th round of bidding, preceded by the Curtain Raiser in London on October 8th, and the formal Launch in New Delhi on October 15th. Further Roadshows are scheduled—to be held in Houston, Calgary, London, and Perth—with the aim of initiating conversation amongst potential foreign and local investors, as well as making a show of India’s world-acclaimed, transparent regulatory framework for awarding O&G contracts.
Murli Deora, the Minister of Petroleum & Natural Gas, offered the opening address in Mumbai. Deora extolled the successes of the NELP process, which has, in its previous iterations, awarded more than 200 blocks, leading to 87 O&G discoveries thus far. The minister noted that the NELP has managed to “attract a significant level of foreign investment,” and in the 8th round of bidding, an excess of $1.1 billion dollars was obtained.
Deora went on to discuss policy: the Ministry has recently decided to liberalize petrol prices, freeing them from the Administered Price Mechanism (APM) that forcibly determined rates irrespective of the market. Deora said that “enabling the oil marketing companies to realize market price” will “improve their financial position and provide expansion plans.” Such policy is an effort to promote the growth of the industry. At the same time, Deora emphasized that the Ministry seeks to “protect the interests of the common man,” and to this effect, subsidies have been instituted to help poorer citizens purchase kerosene and domestic liquid petroleum. The price of natural gas will still be subject to the APM, although the government has affixed prices to a level close to the free market rate.
The minister also mentioned India’s ambitions for refining, and for shale gas production. He emphasized that governmental policies “have promoted investment in the refinery sector in a major way,” and the fast-growing refining hub plans to increase national capacity to 255 MMTPA, from the current 184 MMTPA. And, confident that the United States will soon share their technological expertise regarding shale gas extraction, Deora expected that “in about a year’s time, blocks can be offered for shale gas,” favorably diversifying energy production in the country.
Other public officials addressed the conference as well. Jitin Prasada, Minister of State for Petroleum & Natural Gas, underscored the lucidity and fairness of NELP bidding, and explicated some of the novel policies introduced with NELP 9, such as extending the initial exploration period to 5 years, and total period to 8 years. S. Sundareshan, Secretary of Petroleum & Natural Gas, noted that the investment garnered by the 8th round of NELP was equal to the best-performing O&G bid round in the world for its time, expressed his optimism for a successful 9th round, and lauded the merits of the Production Sharing Contract for partnering companies.
After the state made initial presentations, representative executives from the ONGC, BG, RIL, and Cairn Energy companies spoke to the gathered audience about their positive experiences operating in India, and their hopes for the future. Finally, officials from the Confederation of Indian Industries (CII), and the Directorate General of Hydrocarbons (DGH), respectively, discussed stimulus policies that the state is undertaking within the sector, and the specific rules and offerings of NELP 9.
The Roadshow was truly triumphant not only for the strength and clarity of these presentations, but the dialogue that the conference stimulated amongst concerned organizations across the value chain. At the lunch that followed the rounds of speeches, there was a great deal of mingling and exchange, as attendees discussed their plans and prospective partnerships. The bid closing date for NELP 9 is scheduled for March 18th of next year; bids will be judged on monetary merits, as well as the potency and vision of operators’ proposals, especially in terms of technological expertise.
India hopes that the 9th round of the NELP will be the most fruitful to date. Nonetheless, Secretary Sundareshan, in a media conference that followed the show, stated that the government has plans to do away with the policy, in favor of the Open Acreage Licensing Policy (OALP). Under that prospective framework, companies will be able to compile proposals for exploration blocks in any as-yet-unexplored area that they deem promising, instead of having to bid for whatever the government offers. Of course, a significant data set will have to be compiled first, so that operators may have a considerable understanding of national geography. Given this compilation, Sundareshan said that, ideally, “there will be no NELP 10.”
| Type: | MEDIA |