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India to auction 56 exploration blocks under revised terms

07th January 2014

New Delhi calls for revenue-sharing model ahead of tenth round of New Exploration Licensing Policy

India to auction 56 exploration blocks under revised terms
India is calling for a a revenue sharing business model for tenth round of NELP-X

India’s oil ministry secretary Vivek Rae on Monday announced plans to auction 56 oil and gas exploration blocks in February on revised terms with bidders for the upcoming tenth round of the New Exploration Licensing Policy (NELP-X), The Times of India reported.


"We will profile 56 blocks at the Petrotech conference next week. But notice inviting tender (or bids) will come out sometime next month,” the news report quoted Rae as saying at an industry event in the country.


The revised terms call for a revenue sharing agreement between the bidders and the Indian government. The NELP-X will require bidders to propose the volume of oil and gas output they are willing to share with the government. The ministry will allocate the blocks to the bidders offering the highest share of output from the field.


Rae said: "We are proposing to move to revenue-sharing [sic] model from the current production-sharing scheme. There will be no profit petroleum, no cost recovery, no investment multiple.”


The current production-sharing model allows companies to recover E&P costs before sharing profits with the government. The proposed will enable the government to benefit from instances such as price rise and surprise discovery.


The government will now seek approval of the production-linked payment regime for NELP-X, Rae added.


The Indian government in November last year said it would auction 86 exploration blocks in January.

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