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A look at NELP- Part III
Feb 11, 2008

In the previous article we profiled the first six rounds of NELP. In this article, we continue with a detailed discussion of the VIIth round. Ease of participation
Participation in the VIIth round has been made easier than the earlier rounds. Bidding is open to both foreign and Indian companies in their individual capacities or as joint ventures. No approval is required for bidding. There is no requirement of tender fees; only purchase of data package is required. If the parent company gives a guarantee, then bid to be evaluated on the guarantor’s strength. In order to attract multiple and experienced players in deepwater blocks, preference will be given to consortia between Indian and overseas players.

Evaluation criteria
Exploration blocks under NELP VII have been classified into 3 categories: Onland, Shallow water, Deepwater. They are further divided into type A and type B. Under onland blocks, type S (Small) has been introduced for blocks with area less than 200 square kilometers.

A bid has to be evaluated on a score of 100 points and the bidder has to bid on the basis of technical capability, work programme and fiscal package. It may be noted that the subjective criterion of geological assessment has been done away with in this round of NELP.

Criteria Onland and shallow water blocks Deepwater blocks
  A B S A B
Technical capability Qualifying - 30 30
Work programme 40 50 40 15 25
Fiscal package 60 50 60 55 45
Total 100 100 100 100 100

Technical capability
On land and shallow water blocks:
It is a qualifying criterion. The bidder will be given a score on the basis of operatorship experience, acreage holding, reserve accretion (P1) and annual production.

Small type blocks: No technical competence required.

Deepwater blocks: It is a evaluation criterion. The bidder will be given a score on the basis of acreage holding, operatorship experience, reserve accretion (P1), annual production, consortium/ partnership.

Fiscal package
Bidder will be evaluated on the basis of share in profit petroleum offered to the government. Revenue from a block of oil and gas is divided into cost petroleum and profit petroleum. Cost petroleum (belongs to contractor only) includes royalty, operating expenses and recovery of capital expenditure. Profit petroleum (divided between both contractor and government) is the excess of revenue over cost petroleum.

NPV of government profit petroleum shall be computed after a discount of 10% over project life. The cash flow for the contractor is cost petroleum + contractor’s share of profit petroleum - operating expenses & royalty.

We shall continue with our discussion of NELP VII in subsequent articles.

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