Millennium Post

Gujarat govt withdraws clearances to nine areas for NELP-X blocks

In a setback to the latest oil and gas block auction round, the Gujarat government has withdrawn clearance for the 9 areas falling in the state that are part of the offerings under 10th round of New Exploration Licensing Policy (NELP).

The Narendra Modi-led Gujarat government had on 16 January given its approval for offering 9 blocks in the Cambay basin of the state for offering in NELP-X. But soon after, it withdrew the approval, a top Oil Ministry official said here.

The central government, which as per the Constitution is the owner of both offshore and onland hydrocarbon resource, last month unveiled 46 blocks for offering in NELP-X the first auction round in two years. These blocks are made up of 17 onland areas, 15 shallow water and 14 deepsea blocks. Of the 17 onland blocks, 9 are in Gujarat. The official said Gujarat wants a share of revenues that Centre will earn from the oil and gas produced. This share of the Centre's revenue is additional to the royalty at the rate of 12.5 per cent of price realised on sale of crude oil and 10 per cent for natural gas that currently flows to the state government.

NELP-X auction is to be held under a revenue-sharing model where the bidder quoting the highest amount of oil and gas production to give to the government will get the block. Gujarat wants a share of this revenue, the official said.

‘We are examining the Gujarat government's written communication withdrawing approval for the blocks,’ he said.
If the issue isn't resolved soon, NELP-X round may get postponed and only a new government that will be formed after the April-May general elections will take a call. The Cabinet, the official said, is yet to approve the revenue-sharing model. Some like the Planning Commission favour continuation of the current production sharing contract (PSC) framework, which allows explorers to recover their costs from commercial discoveries before sharing profit with the government.
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