New Delhi, July 07: With Finance Minister Pranab
Mukherjee restoring tax breaks for natural gas, the Government
will relaunch the nation`s largest-ever auction of oil and gas
blocks but the last date of bidding is likely to be extended.
Promotional roadshows for 70 blocks offered for bidding
under the eighth edition of New Exploration Licensing Policy
(NELP) and 10 coal bed methane (CBM) areas were to begin on
April 20 but the programme has been deferred on over ambiguity
on availability of tax holidays for natural gas.
Petroleum Secretary R S Pandey said a revised programme
for domestic and overseas roadshows will be chalked out in
consultation with Oil Minister Murli Deora in next few days.
Mukherjee had in his Budget for 2009-10 stated that seven
years holiday from payment of income tax on profits earned
from production and sale of natural gas would be available for
blocks to be awarded in NELP-VIII. Similar fiscal concession
was already available for crude oil.
"Now that a clarification has come and that there is no
ambiguity, the way has been cleared for the roadshows," he
said.
Oil regulator DGH head V K Sibal, however, said there was
a likelihood of extending the August 10 bid deadline as more
than three months had been lost.
The Government had launched NELP-VIII and CBM-IV on April
9 and bids were to close on August 10.
Although the Finance Minister had restored tax breaks for
natural gas to be produced from NELP blocks, no such fiscal
incentive has been announced for CBM blocks.
Fearing investor backlash on ambiguity over tax holiday
for natural gas, the Government had on April 17 deferred the
promotional roadshows.
The Finance Ministry had in 2008-09 budget scrapped the
seven-year tax holiday or exemption from payment of income tax
on natural gas production. Though oil and gas naturally
occurred together and a single well could be producing both,
the incentive was restricted only for crude oil production.
The move drew flak from oil majors who kept away from the
previous NELP-VII round that closed after the announcement.
The first roadshow for NELP-8 was to be held in Mumbai on
April 20, followed by similar events in Perth (April 27-28),
London (May 4-5), Washington (May 11-12) and Calgary (May
14-15).
India had offered 24 deep-sea blocks, 28 shallow water
blocks and 18 onland blocks for bidding in NELP-VIII hoping to
attract USD 3 billion investment in exploration.
The 75 per cent import dependent nation also offered for
bidding 10 areas for extraction of gas from below coal fields
or CBM, at a time when energy firms worldwide are cutting
investments because of falling prices and economic recession.
Asia`s third-largest energy consumer is aiming to cut oil
imports and has till now awarded 203 blocks in the previous
seven rounds with over USD 11 billion committed in exploration
spend. Besides, 23 blocks have been awarded in the previous
three CBM rounds. More than 6 Trillion cubic feet reserves
have already been established in four CBM blocks.
Since its advent in 1999, NELP has given 68 oil and gas
discoveries in Cambay onland, North East Coast and Krishna
Godavari deep-water areas, totalling over 600 million tonnes
of reserves.
Worldwide spending on oil and gas exploration may drop 12
per cent in 2009 to USD 400 billion, Barclays Capital Research
has stated.
India had offered 57 blocks in NELP-7 last year and
awarded 44 to companies like BHP Billiton and Oil and Natural
Gas Corp (ONGC). In the first six rounds, 162 areas with an
investment commitment of USD 8.33 billion were awarded.
Of the total committed investment of USD 8.33 billion
received in the first six rounds of NELP, USD 3.887 billion
had already been spent by oil and gas companies till March
2007. Of the USD 8.33 billion promised investment, the largest
commitment of USD 3.32 billion was received in NELP-6 where 52
out of 55 blocks on offer were grabbed.
Bureau Report
