NELP under Director General of Hydrocrbons (DGH)

1. New Exploration
Licensing Policy
(NELP)
Presented by:
Abhishek Sakharkar
Aliasgar Mandsaurwala

2. Introduction
• By Government of India in 1997-98
(conceptualized by Amit Singh).
• Objective:
Attract significant risk capital from
 Indian and Foreign companies
 State of art technologies
 Best management practices in the country to meet
rising demands of oil and gas.
Boost production of Oil and Natural Gas.
Equal platform to public and private sector

3. Directorate General of Hydrocarbons
(DGH)
• Founded in 1993 under the Ministry of Petroleum and Natural
Gas.
• Promote sound management of the oil and natural gas
resources having a balanced regard for environment, safety,
technological and economic aspects of the petroleum activity.
• Responsibilities:
Awarding blocks
Executing production sharing contracts
Monitoring developments.
• Headquarters: New Delhi, India
• Minister responsible: Dharmendra Pradhan, Ministry of
Petroleum and Natural Gas
• Agency executive: Shri R N Choubey, Director General.

4. Downstream
The downstream sector commonly refers to:
• The refining of petroleum crude oil.
• The processing and purifying of raw natural gas.
• Marketing and distribution of products derived from crude oil and natural
gas.
• Products include:
 Gasoline or petrol
 Kerosene
 Jet fuel
 Diesel oil
 Heating oil
 Fuel oils
 Lubricants
 Waxes
 Asphalt
 Natural gas and
 Liquefied petroleum gas (LPG) as well as hundreds of petrochemicals.

5. Upstream and Midstream
• The upstream sector includes:
 Searching for potential underground or underwater crude oil and
natural gas fields.
 Drilling of exploratory wells.
• The midstream sector involves:
 The transportation (by pipeline, rail, barge, oil tanker or truck)
 Storage and
 Wholesale marketing of crude or refined petroleum products.
• Pipelines and other transport systems can be used to:
 Move crude oil from production sites to refineries and
 Deliver the various refined products to downstream distributors.
• Natural gas pipeline networks aggregate gas from natural gas
purification plants and deliver it to downstream customers, such as
local utilities.

6. 26 Sedimentary
Basins
1.39
0.4
1.35
Total Area: 3.14 million Sq.
Km.
Onland
Shallow Water
Deep Water
• At present 1.06 million
km2 (33.75%) area is
held under Petroleum
Exploration Licenses in
18 basins.
• In 1999, a mere 11% of
Indian sedimentary
basins were under
exploration.

7. Need for NELP
• Fifth largest consumer of primary energy and the
third largest consumer of oil.
• Huge need for enhancing supply of energy
resources.
• Dependence on imported petroleum continues to
grow.
• Introduction of much-needed capital and state-of-
the-art technology to explore the sector.
• Brought major liberalization in the sector and
created pathways for private and foreign
investment.

8. Salient Features
• 100% FDI allowed.
• No mandatory state participation through
PSUs.
• Blocks to be awarded through open
international competitive bidding.
• ONGC and OIL to compete for licenses on a
competitive basis.
• ONGC and OIL to get the same fiscal and
contract terms as private companies.

9. Salient Features (Cont.)
• Freedom to the contractors for marketing of crude oil
and gas in the domestic market.
• Royalty :12.5% for the onland
10% for offshore areas.
• Cess to be exempted.
• Companies to be exempted from payments of import
duty on goods imported for petroleum operations.
• Contracts to be governed in accordance with applicable
Indian Laws.

10. NELP-VIII
• 31 production sharing contracts (30 June 2010).
8 deepwater blocks
11 shallow water blocks and
12 onland blocks.

11. NELP-IX
• 33 exploration blocks were offered.
• (ONGC) bid for 10 blocks.
• Oil India Ltd (OIL) bid for 29 blocks and
managed to get 10.
• Reliance Industries bid for 2 deep-sea blocks and
4 onshore blocks in Rajasthan and Gujarat.

12. Executive Summary
Parameter NELP I NELP II NELP III NELP IV NELP V NELP VI NELP VII
NELP
VIII
NELP IX
No. of
blocks
offered
48 25 27 24 20 55 57 70 34
No. of
blocks bid
for
28 23 54 21 20 52 45 36 33
No. of
Bids
received
45 44 52 44 69 165 181 76 74
No. of
Blocks
Awarded
25 23 23 21 20 52 44 34 19
No. of
PSCs
signed
24 23 23 20 20 52 41 32 19

13. Investment under NELP (US$
Million)
NELP Committed investment Actual Investment as on 30.06.2014
NELP Rounds
Exploration
Investment
Commitment
Actual
Exploration
Investment
Actual
Development
Investment
Total Investment
NELP-I 1082.23 4412.48 7760.1 12172.58
NELP-II 775.41 823.82 33.36 857.18
NELP-III 978.18 3308.85 1626.45 4935.3
NELP-IV 1135.05 2071.75 3.86 2075.61
NELP-V 847.22 756.9 0.37 757.27
NELP-VI 3570 2020.46 - 2020.46
NELP-VII 1504.61 609.76 - 609.76
NELP-VIII 1102.25 182.48 - 182.48
NELP-IX 733.66 63.10 - 63.10
Total 11728.61 14249.6 9424.14 23673.74

14. NELP-X
• Tenth round may be the last in the series.
• The government intends to shift to the open acreage
licensing policy (OALP).
• NELP-X will have a uniform licensing model —
which means under a single contract, drilling of all
forms of hydrocarbons, from oil and gas to shale could
be done.
• 42 blocks have been shortlisted.
• It will be held with a revenue-sharing model.

15. Failure
• Investors have to wait for the next round of
exploration to participate.
• Investors cannot choose the oil field that they like.
• Collecting accurate data over capacity of oil fields is
a challenging task.
• Faulty production sharing contracts.
• Perception about poor quality of reserves.
• Flip flops in government regulation on gas prices and
marketing terms.
• Lack of clarity on tax and cost implications.
• Delay in getting clearances.

16. OALP VS NELP
• An exploration company can express its interest
in a block any time.
• Data for these blocks would be made available to
the bidders.
• Permits every company to study and specialize in
certain geographies making the entire country
open for E&P.
• Gives operators flexibility in block location, size
and project financing.
• Companies can extend their block boundaries.

17. References
• Directorate General of Hydrocarbons
• Government of India: Ministry of Petroleum and
Gas
• Association of Oil and Gas Operators
• www.Dghindina.org
• petroleum.nic.in/docs/nelp.pdf
• https://en.wikipedia.org/wiki/New_Exploration_L
icensing_Policy

18. THANK YOU