7th June, 2002
Ministry Of Petroleum & Natural Gas  


RAM NAIK UNDERLINES INVESTMENT OPPORTUNITY IN NELP-III

BRITAIN TO PROVIDE ALL POSSIBLE SUPPORT TO COMPANIES INTERESTED IN INDIAN OIL AND GAS SECTOR : DAVID WARREN

LONDON ROADSHOW A MAJOR ATTRACTION FOR E&P COMPANIES

Continuing the efforts to promote its third round of New Exploration Licensing Policy (NELP-III), Government of India launched an effective promotional campaign at London on June 6, 2002, which provides investors an opportunity to compete for 27 blocks for exploration of oil and gas in India’s offshore and onland areas. The earlier roadshows were held at New Delhi on 9th April and at Singapore on 28th May and attracted several E&P companies who showed keen interest in NELP-III.

Shri Ram Naik, Minister of Petroleum & Natural Gas, emphasised the highly attractive opportunity being offered under NELP-III and impressed upon the companies to participate in the bidding process to enter into a long term mutually beneficial relationship and be a part of India’s growing and vibrant Petroleum Sector. He mentioned that the promotional road shows for NELP-III will also be held at Houston, USA (10-11 June) and would conclude at Calgary, Canada (13-14 June).

Shri Naik announced that in order to facilitate investors data viewing centres have been opened at London, New Delhi and Houston. Interested companies can purchase the data at New Delhi in the office of Directorate General of Hydrocarbons. Details on NELP-III are available at the Ministry of Petroleum and Natural Gas web-site www.petroleum.nic.in. and Directorate General of Hydrocarbons web site www.dghindia.org.net. Shri Naik stated that the bid closing date for NELP-III is 28th August, 2002. He exhorted the companies to participate in the bidding process and be a partner to the ever growing India’s Hydrocarbon Sector. Shri Santosh Gangwar, Minister of State for Petroleum & Natural Gas, brought out the latest developments in the Indian gas sector.

Mr. David Warren, Director International Group, British Trade International, Government of UK, speaking to the participants on behalf of Government of U.K. brought out the close cultural and economic ties between India and U.K. He said that U.K. is the second largest trading partner of India. Oil and gas sector constitutes about 5% of this trade. The experience of British companies in this sector has been very good and this offer of blocks under NELP-III provides an excellent opportunity to British companies to make further investments in India. He stated that Government of U.K. would provide all possible support to British companies for closer cooperation with India in the oil and gas sector.

Shri R. Sen, Indian High Commissioner in London, while welcoming the delegates, offered all help they may require while bidding under NELP III. Shri J.M. Mauskar, Joint Secretary in the Ministry of Petroleum & Natural Gas, made presentation on the policy, fiscal, legal and contractual framework and Dr. Avinash Chandra, Director General, Directorate General of Hydrocarbons, made presentation on geology of the offered blocks. Both the speakers highlighted the attractiveness of the terms and geology under NELP-III.

The road show was attended by 53 companies/organizations. Some of the E&P companies, which attended the road show were Shell, BG Group, Cairn Energy, Premier Oil Plc., Hardy Exploration ,Tullow Oil Plc, etc. Some of the major stakeholders in India’s upstream petroleum sector namely Cairn Energy, BG Group and Oil and Natural Gas Corporation also made presentations during the NELP III roadshow about their experience and vision of India’s petroleum sector, especially the upstream sector. They brought out the strong fundamentals and attractiveness of the E&P sector in India. They concluded that investment climate in India being positive and upbeat and geology has high hydrocarbon potential.

The highlights of NELP-III are as under :

  1. Transparent bidding process with weightages of parameters being made public through Notice Inviting Offers (NIO). Bids will be evaluated based on the technical capability (weightage 6%) and financial strength (weightage 4%) of the bidding company or consortium, committed work programme (weightage 60%) and the fiscal package (weightage 30%). Out of these parameters, work programme commitment for exploration phase-I will have the maximum weightage.

  2. Offer of blocks from petroleum rich States like Andhra Pradesh, Assam, Gujarat, Nagaland, Rajasthan and Tripura.

  3. New and upgraded data packages available in digitized form.

  4. Blocks with new data offered on the East Coast and the Southern Tip of India.

  5. Revised Model Production Sharing Contract (MPSC) for NELP-III prepared after consultation with E&P companies and relevant organisations.

The process of offering blocks under the investor-friendly NELP began in January, 1999 with the launch of first round (NELP-I). The policy offers several incentives to oil and gas companies from India and abroad both from Public and Private Sectors on a level-playing field. The incentives include concessional rate of royalty, exemption from payment of cess, freedom to market oil and gas in India, etc. Besides, this year, the Union Budget has brought down the income-tax rate for foreign companies from 48% to 40%. This incentive would further improve the fiscal terms for foreign investors as compared to NELP-I and II.

The new policy (NELP) has been a success as Government of India has signed Production Sharing Contracts(PSCs) for 47 oil and gas exploration blocks under the earlier two NELP offers. These include 39 offshore and 8 onland blocks. The estimated investment in these 47 blocks covering the three exploration phases is about Rs.9,300 crores. The exploration effort has already shown encouraging success as discoveries have been made in the Krishna-Godavari deepwater block of Cairn Energy. With the envisaged exploration programme, more discoveries are expected in near future.

A high level delegation led by Shri Ram Naik is on a visit to London to promote NELP-III to the prospective investors. This includes Shri Santosh Gangwar, Shri Naresh Narad, Additional Secretary, Ministry of Petroleum and Natural Gas, Dr. Avinash Chandra and Shri J.M. Mauskar.
 
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