On 9 April 2009, the Government of India (GoI) announced the
eighth round of its New Exploration Licensing Policy for
exploration of oil and natural gas (NELP-VIII), offering 70
exploration blocks covering an area of around 163,535 sq. kms. The
blocks include 24 deepwater blocks, 28 shallow water blocks and 18
The GoI is inviting all E&P companies as well as investor
companies, whether large or small, to participate in the bidding
process and be a part of its efforts to enhance the energy security
Under the NELP regime, licenses for exploration are awarded
through a competitive bidding system and national oil companies are
required to compete on an equal footing with Indian and foreign
private companies to secure the licences. Under the previous seven
bidding rounds of NELP, 68 oil and gas discoveries have been made
in 19 exploration blocks.
Key features of the bidding round
Companies may bid for one or more blocks, individually or in
association with other companies, through an unincorporated or
incorporated venture. Successful bidders will be required to enter
into a Petroleum Exploration Licence and a Production Sharing
The GoI recently undertook a consultation process with various
stakeholders, such as E&P companies and industry bodies, and
their views have been factored into the preparation of the bid
documents for NELP-VIII. Some features of the terms offered by the
Up to 100% participation by foreign companies.
No mandatory State participation.
No carried interest by national oil companies.
No minimum expenditure commitment during the exploration
No signature, discovery or production bonus.
Income tax holiday for seven years from start of commercial
No customs duty on imports required for petroleum
Biddable cost recovery limit up to 100%.
Option to amortise exploration and drilling expenditures over a
period of 10 years from first commercial production.
Royalty payable to the GoI ranging from 5% to 12.5% based on
the type of operations.
Freedom for the contractor to market oil and gas in the
The following main criteria will be considered when evaluating
(i) Technical capability of the proposed Operator
(ii) Financial capability of the bidding company/consortium
(iii) Work programme commitment
(iv) Fiscal package
Further details of the blocks on offer and the bidding process
can be found at the following websites:
In due course roadshows will be held at locations around the
world, including London, at which presentations will be made on the
emerging geological prospectivity of Indian basins as well as the
contractual and fiscal framework.
The closing date for bids under NELP-VIII is 10 August 2009.
This article was written for Law-Now, CMS Cameron
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