The government is planning to relaunch the eighth phase of bidding for oil and gas blocks under the New Exploration and Licensing Policy (Nelp-VIII) in the second week of August.
The round was earlier launched on April 9, but the roadshows for it were stalled after it was felt that clarity on tax holiday was needed prior to the commencement of bidding. The eighth round will offer 70 oil and gas blocks covering an area of 170,000 sq km. This is the highest number of blocks to be offered in any round.
The revised roadshow schedule is likely to include Mumbai, Calgary, Perth, Brisbane, London and Perth. "We expect to relaunch the eighth round in August after Parliament session comes to an end. We expect the clarity on tax-related concessions for gas production to be in place by then. Investors should know in advance the various incentives before they bid for any block," V K Sibal, director general, DGH, told Business Standard.
The clarity on what constitutes mineral oil is likely to come in the forthcoming Budget. The Budget 2008-09 had taken out natural gas from the definition of mineral oil for the purpose of a tax holiday.
The government had plans to organise promotional roadshows between April 20 and May 12 at various national and international locations to attract investors. Bids were to close on August 10. However, it was deferred due to a lack of clarity over a tax holiday for natural gas.
The finance ministry had in the 2008-09 Budget scrapped the seven-year tax holiday, or exemption from payment of income tax, on natural gas production. Though oil and gas naturally occur together and a single well could be producing both, the incentive was restricted to crude oil production.
Sibal said the geo-scientific data on the blocks were being made available to potential investors through data rooms in Noida, London, Houston and other locations.
"The Noida data room is overbooked. Many international companies are assessing the data in London and Houston. There is interest but the companies are waiting for announcement of the schedule," he said. The steady revival in crude oil prices is also likely to boost investor sentiments.
Along with 70 oil and gas blocks, the government is also offering 10 blocks under the fourth round of coal-bed methane exploration policy for exploration of gas.
Since 1997, when the government launched the Nelp, it has awarded 206 blocks. Out of these, 68 discoveries of oil and gas have been made in 19 blocks, establishing reserves of 500 million tonnes of oil and oil-equivalent gas.
