The government will announce the seventh round of New Exploration and Licensing Policy (NELP) in April and bids for the oil and gas blocks will be invited by July, said V K Sibal, director general, Directorate General of Hydrocarbons, today. "We are currently compiling the data packets. Announcement of NELP-VII is expected to be made by late April and bids would be invited from June-July," Sibal said.

The new round of bidding (NELP-VII) would offer about 4,00,000 sq km of area for exploring oil and gas," a senior official in the petroleum ministry said. It is expected that around 60 blocks would be offered under NELP-VII. Under NELP-VI, 55 blocks covering 3,52,000 sq km of area was offered for bidding.

The petroleum ministry is also examining the possibility to introduce open acreage licensing policy (OALP) simultaneously with NELP to start with. "We are considering the possibility of introducing OALP between NELP-VII and NELP-VIII. But nothing is yet finalised," an official said. OALP allows investors a continuous window of exploration opportunities wherein they would have flexibility to choose the areas, where they intend to carry out exploration.

For formulating OALP, various activities such as preparation of maps on different scales, compilation of data in grid form, wherever available, bidding procedure and other exercise are being undertaken. The policy is expected to be in place sometime in the next fiscal. Explaining OALP, a ministry source said, "All open acreage (areas that are yet to be licensed or leased) are put on a grid system and are available for offers by interested companies. Expression of interest received for an area or areas are advertised through a global bidding system and other companies may also participate on equal terms and conditions under OALP."

Besides the oil and gas blocks, the DGH is also planning to offer new coal bed methane (CBM-IV) blocks for exploration. "We are in dialogue with the coal ministry as they have to give us the area for exploration," Sibal said, adding CBM-IV could be announced with NELP-VII.

The government has recently completed awarding 10 CBM blocks spread across six states under CBM-III. Meanwhile, oil and gas body Directorate General of Hydrocarbons plans to launch an advanced seismic survey next year in the Krishna-Godavari Basin off Andhra Pradesh for further exploration of gas hydrates, Dinsha Patel, minister of state for petroleum and natural gas, said.

"The Directorate General of Hydrocarbons has plans to carry out specialised survey ‘Q-Marine’ for mapping gas hydrates in the Krishna-Godavari area in the year 2007," he said in a written reply in Lok Sabha. Natural gas hydrates are solid crystals consisting of gas molecules enclosed within water molecules, and found in marine sediment beneath the ocean on continental shelves. "Technology for exploitation of gas hydrates is not available presently anywhere in the world, including India," the minister said.

The government launched a 4-legged drilling programme for gas hydrate on May 5 under the National Gas Hydrates Programme, at a budgeted cost of $36 million. It announced in June that sizeable reserves of good quality gas hydrates have been discovered in the KG Basin while undertaking drilling activities in the area by the drillship JOIDES Resolution.

Winners of exploration blocks under the sixth round of New Exploration Licensing Policy (NELP-VI) may have to wait for some more time before the blocks are finally awarded. Objections have been raised in certain quarters over the issue of profit-sharing with the government in at least 19 bids, including seven deep-water blocks won by Reliance Industries (RIL) and six onshore blocks where Oil India (OIL) emerged as the first ranking bidder.

The 19 blocks under question include bids awarded to Focus-Newbury and Petrogas-Gail-IOC consortia in the shallow-water blocks and an onland block awarded to the Naftogaz-RNRL-Geopetrol combine.Although officials have maintained that there are no hurdles and the bids are "technically right" under the NELP guidelines, sources within the petroleum ministry said that the final call will be taken by the petroleum minister himself.

The objections to the share of profit petroleum, which is these cases have shown a lower stake for the government in the later years of production from these reservoirs was pointed out in the ECS meeting, sources said.

But it was felt that since the bidding was through a transparent mechanism and bids had to conform to the rules to qualify it was perhaps not right to re-negotiate bids from winning companies. Also falling profit shares "may not be rejected outrightly" particularly if the net present value (NPV) offered by such bidders is the highest amongst all the bidders.

Brazilian oil major Petrobra, with expertise in deepwater hydrocarbon exploration, is likely to enter into an agreement with Oil and Natural Gas Corporation (ONGC) to jointly explore and evacuate the latter’s gas from its recent finds in the ultra deepwater block in the Krishna Godavari basin.

Sources in ONGC said the company would be in a position to declare the proven probable gas reserves by the middle of next month. "Petrobras has the kind of expertise needed to explore and evacuate gas from ultra deep water and we are actively looking at a tie-up with them for our KG basin block," a senior ONGC executive said. The two companies are expected to sign a wider memorandum of understanding (MoU) which will include exploration and evacuation of gas from the KG-DWN-98/2 block. "Just one well has been drilled so far.

ONGC already has agreements with steel magnate Lakshmi Mittal, the Hindujas and global energy major Royal Dutch Shell for cooperation all along the hydrocarbon chain. While the agreement with Mittal has resulted in the two jointly picking up oil blocks in Nigeria, the ones with the Hindujas and Shell have not borne fruit so far. 

ONGC has proposed to hunt for oil all over Russia. In this direction ONGC has already signed a agreement with Rosneft. The Russian company will hold a 51 per cent stake in the proposed venture, while ONGC would have the rest. On the other hand, OVL had proposed to team up with Rosneft to bid for Sakhalin III project in far east Russia.

OVL, the overseas arm of Oil and Natural Gas Corporation, has a 20 per cent stake in the Sakhalin I project. It has shipped 90 thousand tonnes (700,000 barrels) of crude from its share in the project. It will ship second cargo by the month-end.ONGC’s subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL) will process the Sakhalin crude. Sakhalin I project will reach the peak rate of 12 million tonnes per year once a new onshore crude processing unit is commissioned in this month.

ONGC Videsh Ltd (OVL), the overseas arm of Oil and Natural Gas Corporation (ONGC), has successfully completed the process of transferring the parent stake in Syrian oilfields to itself. A senior OVL official said, "We are managing the asset now. Both ONGC and OVL had recently received approval of their respective board’s for transfer of parent’s stake to OVL. Last year, ONGC and China National Petroleum Company International (CNPCI) won a bid to acquire about 37.5 per cent stake in Syrian oilfields of Canadian oil company Petro-Canada.

While CNPCI’s equity came through its subsidiary Fulin Investments SARL, ONGC directly funded 55 per cent of OVL’s share through ONGC Nile Ganga. The balance 45 per cent came from ONGC-Mittal Energy Ltd (OMEL). The total exposure of the ONGC Group in the project is estimated at Rs 995 crore.This transfer of stake is expected to strengthen OVL’s holding in the jointly acquired equity shares of Petro-Canada in Syrian oilfields. Besides, the asset transfer was expected to help resolve operational and accountancy issues, the official told.

Gujarat State Petroleum Corporation (GSPC), the state-owned oil and gas exploration company, has found more oil and gas reserves in Krishna Godavari basin in Andhra Pradesh.In the wells KG8 and KG17 the GSPC has found 17.3 MMSCFD of natural gas. It is expected that daily production would be of around of Rs.50 lakh which would last for next 15-20 years. State Energy Minister Saurabh Dalal said that the market price of this bulk is Rs.3,000crore

Oil and Natural Gas Corporation and rival Reliance Industries are in preliminary discussions to develop Tuba oil field in southern Iraq. The companies declined to comment. ONGC, through its overseas investment arm ONGC Videsh, and Reliance are expected to hold 30 per cent each in the venture, and Sonatrach of Algeria would hold 40 per cent.

The three groups had tried to secure oil fields in Iraq in 2000.ONGC had previously won approval to develop oil fields in Iraq, home to some of the world’s largest oil reserves, but activity was halted by the war.As economic growth swells to 9 per cent, India is looking further afield for energy sources. It imports about 70 per cent of its fuel. Reliance Industries owns India’s largest oil refinery but has not sought to explore for oil in the Middle East, apart from a holding in Yemen.

The company has 32 exploration blocks across India. In contrast, ONGC has interests in Sudan, Libya, Burma, Iran, Iraq and Syria.It teamed up earlier this year with China’s Sinopec to buy a 25 per cent stake in Omimex de Colombia, a subsidiary of Omi-mex Resources, a US-based oil explorer and producer.The $US800 million ($1.018 billion) deal was the largest since China and India decided to co-operate in the race for energy assets.In February ONGC and China National Petroleum Corporation completed a pioneering $US580 million takeover of oil assets in Syria from Petro-Canada. ONGC last year paid $US1.4 billion for ExxonMobil’s 30 per cent stake in a field in Brazil.

Gujarat State Petroleum Corporation (GSPC), the state-owned oil and gas exploration company, has finally struck high pressure gas in the third zone of the fifth well in Deen Dayal block, where it was carrying out tests for gas reserves.The gas discovered in the fifth well is "substantial and commercially viable". Gas and oil was discovered during the drilling of the fifth well in October and November itself.

However, it was not clear then if the findings were commercially viable.The company started testing of the fifth well (KG#15) early this month, but was faced with major setbacks during the testing procedure of the first two zones due to water leakage."Clean gas at a high pressure of 8,500 PSI has been encountered at a depth of 4,600 metres. This indicates enough commercially exploitable gas reserve.

The pressure of 8,500 PSI is higher than the pressure encountered in the fourth well (KG#17), which was lower at 8,450 PSI. However, the pressure is markedly lower than the 14,000 PSI which was encountered in the first well KG#8 last year.The high pressure gas encounter in the fifth well has come after almost a month of starting the testing process.

The discovery will give a boost to the company’s plans to raise funds through the initial public offering and also to appoint a strategic partner to develop the Deen Dayal block. Deen Dayal is part of the 1,800-sq-km KG-OSN-2001/3, which is operated by GSPC with 80% stake. Last year, the company had claimed discovery of 20 tcf gas. Since then, the company has drilled two more wells.

ONGC Videsh has been awarded a block for oil exploration in Libya by the country’s National Oil Corporation.Exxon Mobil Corp and Japan’s Inpex Holdings Inc are the other two companies which bagged blocks. These three blocks drew only single bidders, the National Oil said after its management committee met on December 24 to finalise the results of the bid.

ONGC Videsh was awarded a 28% share in one well, Exxon Mobil got 22.3% in four, and Inpex Holdings bagged 12.9% in three wells. Russia’s Gazprom and Tatneft won the bulk of licences in the round last week.Libya wants to attract foreign investments to bolster it oil output capacity to more than 3.0 million barrels per day by 2010-12 from about 1.6 million bpd at present.ONGC Videsh has operations in the Asia-Pacific, West Asia, Africa and Latin America. ONGC Videsh already has a presence in Libya.

It signed an agreement with TPOC in August 2002 for the acquisition of 49% participating interest in NC-188 and NC-189 onland exploration blocks. Block NC-188, measuring an area of 6,558 sq km, is located about 250 km south of Tripoli in the Ghadames basin.

The Essar group may invest $400-600 million over the next few years to gain a sizeable presence in both land and offshore drilling services. Essar Oilfields Services Ltd, the unlisted subsidiary of Essar Shipping and Logistics, will oversee the group’s efforts in this direction. Sources said Essar Oilfields is planning to have a "diversified and strong fleet" of around 25 rigs for which it could invest up to $600 million.

Apart from Essar Oilfields, the other companies that are engaged in drilling services include the recently listed Great Offshore Ltd, formed by the de-merger of Great Eastern Shipping and Aban Offshore.Meanwhile, it is learnt that Essar Oil may have struck a medium-sized oil and gas reserve in prospect B in CB-ON/3 pre-NELP block in Mehsana in Gujarat. Essar Oil holds 70 per cent operating interest in the 574-sq. km. onshore block in the Cambay basin.

ONGC is a natural partner with 30 per cent stake.According to sources close to the development, the in-place reserve is identified to be in the region of 18 million barrels of oil equivalent. The recoverable reserve is reportedly pegged at 2.7 million barrels of oil equivalent.

Bharat Petroleum (BPCL) will pick up a 25% participating interest in blocks 48 1B and 2C in the southern gas basin of the North Sea.The company joins a consortium led by Australian firm Encore Oil and UK company Norwest for a consideration of about Rs 55 crore.The North Sea contains the majority of Europe’s oil reserves and is one of the largest non-OPEC producing regions in the world. While most of the reserves lie beneath waters belonging to the UK and Norway, some fields belong to Denmark, the Netherlands and Germany. To take forward its interest in prospecting for oil and gas, BPCL has recently formed an upstream subsidiary, Bharat Petro Resources, with an authorised capital of Rs 1,000 crore.

BPCL chairman Ashok Sinha said, the company has committed Rs 600 crore in four blocks in India and two abroad. It is willing to increase this exposure to Rs 4,000 crore, if and when there is a discovery. In India, the company has five blocks, of which two are in deep waters and three onland. Most were acquired in NELP 4 and are in partnership with ONGC and OIL.

 The state-owned Oil India Ltd-Indian Oil Corp combine and Gujarat State Petroleum Corp (GSPC) have won five onshore oil blocks in Yemen. Oil India Ltd and its government-appointed partner for overseas exploration, IOC, won Blocks 82 and 83 in the third round of auction, industry sources said.

The two state-owned companies have 15 per cent stake each in the consortia led by Medco Energy with 45 per cent stake. Kuwait Energy Co has the remaining 25 per cent stake.A total of 14 blocks were on offer in the third round. Blocks 82 and 83 are located near an oil producing field operated by Canada’s Nexen in the south-eastern Hadhramount province of Yemen. Block 82 measures 1,853 square kilometers, while Block 83 is spread over an area of 364 sq km.

Gujarat government-run GSPC won three out of four blocks it had bid. GSPC, which is the operator with 45 per cent stake, and its partners Jubilant Enpro (30 per cent) and Alkor Petro (25 per cent) won blocks 19, 28 and 57, sources said.Block 19 and 28 lie in the producing Marib and Masila basins, while Block 57 lies on the border with Saudi Arabia.GSPC lost out Block 84 to Norway’s DNO.

Reliance Industries Ltd had won two blocks, 34 and 37, in the second round of auction. Hood Oil of Yemen is RIL’s local partner in the two blocks.Blocks 34 and 37, each measuring around 7,500-sq km and located on the border with Oman, were among the seven blocks offered by Yemen in its second licensing round.RIL, which also has exploration blocks in Oman, East Timor and Columbia, is likely to sign a Production Sharing Contract (PSC) for Blocks 34 and 37 next month.

ONGC Mittal Energy (OMEL), the joint venture between ONGC and Mittal group, is in an advanced stage of signing a farm-out agreement for operating an exploration block in Turkmenistan.The company is also looking at various such opportunities in Kazakhstan, Turkmenistan, Azerbaijan and Indonesia. OMEL has also bagged two blocks in Nigeria and the production-sharing contracts for the same are expected to be signed shortly.

The joint venture recently bid for an offshore block in Trinidad & Tobago. ONGC Videsh (OVL), the overseas arm of ONGC, had entered into an agreement with Mittal Investment Sarl in October 2005 to form the joint venture.The two partners have agreed to participate in the hydrocarbons business on an exclusive basis in 10 countries. In another 17 countries, the two partners have agreed to work on identified projects.

ONGC has denied recent reports in a section of media, which raised doubts about the continuity of the JV between."Press reports which suggest that the ONGC-Mittal joint venture is not running well, are absolutely baseless," the company said in a statement citing the success of ongoing projects and proposed ventures.