On Oct. 15, 2010, the Government of India launched the ninth round of the New Exploration Licensing Policy (NELP IX) offering 34 blocks for competitive bidding. The leasing area covers 34,289 sq miles (88,807 sq km), including 19 onshore blocks, eight deepwater, and seven shallow-water blocks. The closing date for applications is March 18, 2011. In the 26 NELP blocks previously awarded, 87 oil and gas discoveries have been made.

The government did not get a great response during last year’s NELP VIII licensing round – 70 blocks were offered and 76 bids were received for only 36 blocks. This year, with the recovering world economy and government’s commitment to ease control over pricing, more investors are likely to participate.

The NELP IX leasing area covers 34,289 sq miles (88,807 sq km), including 19 onshore blocks, eight deepwater, and seven shallow-water blocks. (Map courtesy of the Government of India)

The NELP IX leasing area covers 34,289 sq miles (88,807 sq km), including 19 onshore blocks, eight deepwater, and seven shallow-water blocks. (Map courtesy of the Government of India)

Among the 19 onshore blocks being offered in NELP IX, 11 are in Cambay Basin, three blocks are in Assam- Arakan Basin, two each in Rajasthan and Vindhyan basins, and one block in the Ganga Basin.

In terms of financial risks, the Cambay Basin provides the safest investment option as this is one of the highest hydrocarbon- producing areas in the country with more than 150 oil and gas fields. Eight blocks being offered in the core part of the Cambay Basin are categorized as S-Type, small sized blocks with area less than 77 sq miles (200 sq km).

The two Rajasthan blocks are close to existing discoveries and have good potential for gas. The other six onshore blocks are categorized as frontier area blocks – three are in the Assam-Arakan Basin (in the northeast part of the country), which contain more than 90 discoveries. The Vindhyan and Ganga basins are among the least explored onshore areas in the country.

Among the seven shallow-water blocks, three are in the Kerala-Konkan Basin and two blocks each in the Mumbai and Kutch basins. Kerala- Konkan is one of the least explored regions in the country, and the main potential is believed to be the subbasalt Mesozoic sediments. Kutch Basin has seen only five small hydrocarbon discoveries so far. The Mumbai Basin is one of the major producing areas in the country with more than 100 fields, including Mumbai High, which is the biggest oil-producing field in India.

In recent years, deepwater exploration focused mainly in the Krishna- Godavari (KG) Basin, with successes including the major Dhirubhai 1 and 3 gas discoveries by Reliance Industries Ltd., which now are the largest gas-producing fields in the country. Although no blocks are offered in the KG Basin in this round, there is believed to be significant potential for other deepwater areas in the country that are underexplored.

Four deepwater NELP IX blocks are in the frontier Andaman Basin, where 14 wells have resulted in one small gas discovery. Two deepwater blocks lie in the Mumbai Basin and one block each in Saurashtra and Kerala-Konkan basins. There has been very little exploration activity in these basins with no success to date.

Considering the continuously increasing energy demand and good investment environment in the country with a fast-growing economy, well developed infrastructure, and a stable democratic regime, the NELP IX licensing round provides substantial opportunities to E&P companies.

For more information, visit www.indianelpix.com.

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