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 onland blocks.

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 of India.


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 Contract.

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 GoI are:

  • 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 period.
  • No signature, discovery or production bonus.
  • Income tax holiday for seven years from start of commercial production.
  • No customs duty on imports required for petroleum operations.
  • 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 domestic market.

Bid Evaluation

The following main criteria will be considered when evaluating bids:

(i) Technical capability of the proposed Operator

(ii) Financial capability of the bidding company/consortium

(iii) Work programme commitment

(iv) Fiscal package

Further information

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 McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 23/04/2009.