NELPNew Exploration Licensing Policy

Industry Information Insights 2014

Table of Contents

Executive Summary

Background

Introduction

Objectives of NELP

NELP Current Status

NELP IX and X

Production From NELP

Executive Summary

• Nine rounds of NELP has been completed in which 360 exploration blocks were offered.

• PSC for 254 blocks have been signed so far.

• 118 discoveries have been made in 39 blocks.

• Production has started in 6 discoveries in 3 blocks.

• NELP X has 46 blocks on offer.

Background

Petroleum exploration and production activities were initially carried out in India by twonational oil companies (blocks were offered on nomination basis):

1. Oil and Natural Gas Corporation Limited (ONGC)

2. Oil India Limited (OIL)

With the liberalization of economy in 1991, the Indian sedimentary basins were opened toprivate sector companies also.

From 1991 to 1993, three bidding rounds of small and marginal fields discovered by ONGCand OIL were offered to other companies.

From 1993 to 1995 (Pre-NELP), six rounds of bidding were conducted to attract privateinvestment in exploration and development with NOCs as licensee.

Introduction

The New Exploration Licensing Policy (NELP) for exploration & production of oil & naturalgas and the Coal Bed Methane (CBM) Policy were formulated by the Government of India,with Directorate General of Hydrocarbons (DGH) as the nodal agency, during 1997-98 toprovide a level playing field to both the Public and Private sector companies in explorationand production (E&P) of hydrocarbons.

Government of India approved the New Exploration and Licensing Policy (NELP) in 1997and it became effective in February 1999.

Since then, licenses for exploration are being awarded only through international competitivebidding mechanism. National Oil Companies are required to compete on an equal platformwith foreign and Indian companies to secure Petroleum Exploration Licenses.

Nine rounds of bids have been invited so far under NELP.

Objectives of NELP

• To step up the level of investment in exploration in India to hasten the pace of reserveaccretion which can serve as a base for higher level of domestic production to meet therapidly growing demand for petroleum.

• To provide a level playing field to Private, Foreign and National Oil Companies (NOC) byoffering exploration acreages through International Competitive Bidding Process on equalterms and conditions.

• To liberalize and open up the Exploration and Production (E&P) sector for Private andForeign investments, by allowing up to 100% Foreign Direct Investment (FDI).

NELP Current Status

A total of 360 exploration blocks were offered under nine rounds of NELP bidding held sofar, of which Production Sharing Contracts (PSCs) have been signed for 254 blocks by variousCompanies (Central/State Public Sector Undertakings: 144 blocks; Private Companies: 70blocks; and Foreign Companies: 40 blocks, as operators).

So far, 118 discoveries (45 oil and 73 gas) have been made in 39 New Exploration LicensingPolicy (NELP) blocks.

This has resulted in establishment of In-Place oil volume of 39.76 Million Metric Tonnes(MMT) and gas volume of 705.36 Billion Cubic Meters (BCM) respectively.

Blocks Summary for NELP Rounds

NELP Round Launch YearBlocks Offered

PSC Signed Relinquished Operational

Pre NELP 1993 28 14

NELP-I 1999 48 24 17 7

NELP-II 2000 25 23 18 5

NELP-III 2002 27 23 9 14

NELP-IV 2003 24 20 3 17

NELP-V 2005 20 20 6 14

NELP-VI 2006 55 52 52

NELP-VII 2007 57 41 41

BELP-VIII 2009 70 32 32

NELP-IX 2010 34 19 19

Total 360 282 53 215

NELP IX

The Government of India launched Ninth bid round of New Exploration Licensing Policy(NELP-IX) on 15 October, 2010.

34 blocks covering an area of about 88,807 Sq. km were offered under NELP-IX. The offeredblocks included 8 deepwater blocks, 7 shallow water blocks and 19 onland blocks.

A total of 74 bids were received for 33 blocks from National Oil Companies and private orforeign companies for 33 exploration blocks (8 deepwater blocks, 6 shallow water blocks and19 onland blocks).

In the ninth round of NELP, Government of India offered 34 exploration blocks against whichbids for 33 blocks were received. Production Sharing Contracts (PSC) for 18 blocks has beensigned till date.

NELP X

The activities related to the offering of exploration blocks under tenth bidding round of NewExploration Licensing Policy (NELP-X) have been initiated.

A total of 46 blocks (17 Onland, 15 shallow water and 14 deep water blocks) have beenidentified and to be offered under NELP-X in 13 prospective sedimentary basins of India, forexploration of oil and natural gas, covering an area of 1,66,053 sq. km.

The Ministry of Petroleum & Natural Gas has secured inter-ministerial clearances for 46blocks to be offered under NELP-X.

Production From NELP

Commercial oil or gas production has commenced from 6 oil/gas discoveries made in the following 3 NELP blocks.

1. CB-ONN-2000/2 (NIKO - 100%)

2. CB-ONN-2000/1 (Gujarat State Petroleum Corporation Limited - 50%; Gail (India) Limited - 50%)

3. KG-DWN-98/3 (Reliance Industries Limited - 90%, NIKO - 10%)

Production Sharing Contracts

A Production Sharing Contract (PSC) is a contractual regime entered into by the Governmentand the Contractor for the purpose of E&P (Exploration & Production) of hydrocarbonresources - crude oil and natural gas.

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