OVERVIEW

Introduction of NELP

Main Features of NELP

Pre – NELP conditions

Rounds of NELP

Comparison

Future Vision

Conclusion

INTRODUCTION NELP provides a level playing field in which all the

parties may compete on equal terms for the award ofexploration acreage.

GOI announced NELP in 1997-98 budget.

It took 2 fiscal years and 2 successive government tofinalize.

The tax incentive promised to prospective investors.

After several go and halt signs by GOI, NELP finally gotUnderway in 1999.

MAIN FEATURES OF NELP

Fiscal stability provision in the PSC (ProductionSharing Contract ).

No signature, discovery or production bonus.

No customs duty on imports.

No mandatory state participation.

No carried interest by National Oil Companies (NOC).

Freedom to the contractor for marketing of oil & gasin the domestic market.

MAIN FEATURES OF NELP

No cess on crude oil production.

Royalty to be paid on crude oil & natural gas on

Volume basis.

Income tax holiday for 7yrs from start of

commercial production.

OBJECTIVES OF NELP ROUNDS

Intensive exploration of Indian basins.

Opening up of acreages in ultra deep water &frontier areas.

To stimulate & promote interest and activity froma wide range of E & P players.

To bring-in new & state of art technology inexploration & exploitation.

Level playing field to all participating companies.

Transparent Bid Evaluation system .

CHANGING SCENARIO

7

1990 2 Companies

3 Producing Basins

2000 12 Companies

7 Producing Basins

2007 24 Companies

10 Producing Basins

19451 Company

1 Producing Basin

NELP SCENARIO 1945 : Burma Oil Company in Assam Shelf area

1990 : ONGC & OIL

Basins : Assam Shelf , Cambay and Bombay High

2000 : ONGC, OIL, CairnEnergy, GSPC, Essar, HOEC, Moscbacher, Okland, Poenix, Hardy, Canoro, Premier Oil,

Basins : Assam Shelf, Cambay, Bombay High, Cauvery, KG, Assam Arakan Fold bed, Jaiselmer

2007 : ONGC, OIL, CairnEnergy, GSPC, Essar, HOEC, Moscbacher, Okland, Poenix, Hardy, Canoro, Premier Oil, RIL, Enpro-Finance, Gazprom, Jubiliant Oil & Gas, Geo Petrol, ENI, Niko, Focus, Santos, Petrogas, Naftogaz, PrizePetroleum,

Basins : Assam Shelf, Cambay, Bombay High, Cauvery, KG, Assam Arakan Foldbed, Jaiselmer, Barmer Sanchor, KG Deep Water, NEC

PRE INDEPENDENCE 1866-1947

Oil exploration in India commenced in 1866 when Mr.Goodenough of McKillop Stewart company drilled awell near Jaypore near upper Assam.

First commercial oil discovery in 1889 at Digboi.

1893 rights were granted to Assam oil syndicated toerect a refinery and led to formation of Assam OilCompany (AOC)in 1899.

1947-1960

After independence GOI realized the importance of Oil& Gas and framed Industrial Policy Statement of 1948.

Top priority for development of Petroleum Companies.

Indo-Stanvac Project a JV between GOI and StandardVaccum Oil Company of US in 1953 gave the first oildiscovery of independent India near Nahorkatiya.

1947-1960

In 1955 GOI established ONGD (Oil and Natural Gas Directorate) with the help of GSI (Geological Survey of India).

From 1958 ONGC started its exploration in:

1. Himalayan Foothills – Ganga Plains

2. Alluvial tracks of Gujarat

3. Upper Assam and West Bengal

4. Cambay Basin

1961-1991

1962 experimental seismic surveys were carried out in Gulf of Cambay.

Also western offshore survey details resulted in Bombay offshore India’s biggest commercial discovery.

In 1990 commercial oil discoveries by OIL in Rajasthan.

And Assam in 1991.

HISTORY OF PRE-NELP ROUNDS

Exploration bidding rounds started in 1979

The initial rounds were not successful.

1st four rounds – 12 years (1979-1991)

Next five rounds in 2 years (1994-1995)

ROUNDS OF EXPLORATION

1st Round of Exploration – 1980 – 32 Offshore blocks

2nd Round of Exploration – 1982 – 50 Onshore and Offshore blocks

3rd Round of Exploration – 1986 – 27 Offshore

4th Round of Exploration – 1991 – 72 Blocks (39 Offshore & 32 were Onland)

5th & 6th Round of Exploration - 1993 – 45 Blocks

7th & 8th Round of Exploration – 1994 – 45 Blocks

POST INDEPENDENCE & PRE NELP ERA

Discovery of Naharkotiya in NE in 1953 Ankleshwar in Cambay Basin in 1958 Mumbai High in Mumbai Basin in 1972 Cauvery in 1958 (Karaikal-1) Jaiselmer sub-basin in 1958 (Manhertibba-

1) Assam-Arakan yoma fold belt in 1973

(Baramura-1) Krishna-Godavari in 1982 (Narsapur-1)

Number

Blocks offered 379

Bids received 148

Contract signed 28

PRE NELP

0

100

200

300

400

Blocks offered Bids received Contract

signed

Number

Number

•Pvt. Companies felt that the incentive structure designs were not attractive for the higherperceived risk

•Inordinate delays in awarding contracts (up to 2-3 yrs)

•After signing contracts, it took years to obtain clearances from various agencies of the GOI &State Govt. to go ahead to start the operations

NELP I– JANUARY 8, 1999Number

Blocks offered 48

Bids received 45

Contract signed 24 0

10

20

30

40

50

Blocks offered Bids received Contract

signed

Number

Number

World class gas discovery by RIL-NIKO in 2002 in KG off shore

block

Cairn energy’s discovery in KG deep water block

Gas discovery by RIL in Mahanadi shallow water block

NELP II – 2000Number

Blocks offered 25

Bids received 44

Contract signed 230

10

20

30

40

50

Blocks offered Bids received Contract

signed

Number

Number

3 Discoveries were made in Cambay Basin GSPC discovered OIL &

NIKO discovered natural gas

NELP III – 2001Number

Blocks offered 27

Bids received 52

Contract signed 23

0

20

40

60

Blocks offered Bids received Contract

signed

Number

Number

GSPC - jubilant - GGR consortium made world class gas discovery in KG

( KG-OSN-2001/3) offshore block in June, 2005

NELP IV – 2003Number

Blocks offered 24

Bids received 44

Contract signed 20

0

10

20

30

40

50

Blocks offered Bids received Contract

signed

Number

Number

Provision of fast track arbitration

Higher weightage for technical and financial viability of deep water

block

Surcharge on foreign companies abolished

Bank guarantee to be returned after completion of MWP

NELP V – 2005Number

Blocks offered 20

Bids received 69

Contract signed 20

Workstations were provided in data centers in London, Houston, Calgary & Dubai to facilitate companies

to review and analyze data.

Govt. decided to take its profit share of natural gas in cash or kind for a block of 5yrs instead of such

option being made every year.

Co.’s with net worth US $500million or more not required to give bank guarantee towards MWP

commitment as against the threshold limit of US $ 1 billion earlier.

0

20

40

60

80

Blocks offered Bids received Contract

signed

Number

Number

NELP VI – 2006Number

Blocks offered 55

Bids received 165

Contract signed 19

Check on aggressive/speculative bidding

• Uniform seismic coverage of basins

• Participation of E&P companies with global experience

– Induction of new technology

– Global knowledge

– Better geological models

– Better E&P practices

• Better Government take

0

50

100

150

200

Blocks offered Bids received Contract

signed

Number

Number

NELP VII

Approximately 50 to 60 blocks have been identified forthe offering.

Rajasthan Basin, Cambay Basin, Himalayan Foreland &Punjab Basin, Ganga Basin, Kutch Basin, SaurasthraBasin, Vindhyan Basin, Mumbai Offshore Basin, Kerala-Konkan Basin, Purnea Basin, Bengal Basin. MahanadiBasin, Krishna – Godavari Basin, South RewaBasin, Palar Basin, Assam – Arakan Basin, DeccanSyneclise, Cuddapah Basin, Andaman Basin.

Expected Blocks

Onland : 40-45

Shallow Water : 13-15

Deep Water : 20-25

Total : 73-85

NELP ROUNDS OVERVIEW

Blocks

offered

Bids

received

Contracts

signed

Pre - NELP 379 148 28

NELP I 48 45 24

NELP II 25 44 23

NELP III 27 52 23

NELP IV 24 44 20

NELP V 20 69 20

NELP VI 55 165 19

NELP – A SUCCESS STORY

48

2425

23

27

23 24

20 20 20

55

52

0

10

20

30

40

50

60

NELP-I

(1999)

NELP-II

(2000)

NELP-III

(2002)

NELP-IV

(2003)

NELP-V

(2005)

NELP-VI

(2006)

Blocks Offered

Blocks Awarded

% of success increased with every NELP round NELP V had 100% success at

this point after receiving 100% we decided to increase the blocks on offer and

met with 95% success straightaway in NELP VI

COMPARISON

COMPARISION

Pre-NELP

(1993 –2006)–13 Yrs.

NELP-I, II & III, IV,V

(2000-06)-6 Yrs.

2D Seismic Survey (LKM) 24,091 1,09,305

3D Seismic Survey (SKM) 5,304 67,773

Exploratory Wells (No.) 167 93

PSC Blocks 28 138

No. of Discoveries

(Up to 15-04-2007)

25 40

Investment made on Exploration

(US$ Million)

781.65 1451.18

FUTURE OF NELP

Out of 90 blocks under exploration only a few of theblocks are explored through drilling

Hydrocarbon potential of many blocks yet to beassessed by drilling

Last Seven years of NELP opened up new areas forhydrocarbon occurrence

Confidence build-up in discovering more & more oiland gas in new areas

Very high chances of discovering much morehydrocarbons in country

CONCLUSION

NELP is a success.

India is highly under /unexplored

Possibility of striking of rich oil and gas reserves inpoorly explored /unexplored older sediments quitehigh.

Need for acquiring geo-scientific data across the country

Integration of entire geo-scientific data for bettergeological understanding of regional & localprospectivity.

SOURCES

Directorate General of Hydrocarbons

Paper on E&P Licensing Policy –

PETROFED , Price Water House Coopers

(Knowledge Partners)

MoPNG