Contract changes hold up NELP VII

Contract changes hold up NELP VII
Oil and gas slowdown
Subtraction in blocks on offer due to security concerns
SPECIAL CORRESPONDENTMumbai
The launch of the seventh round of the New Exploration Licensing Policy (NELP VII) has been deferred due to changes in contractual terms. The delay is hugely on account of the government's insistence that law ministry mandarins should vet the changes before the round is formally announced. It is learnt that the revision, which is of a significant nature, is intended to clear hurdles in the way of attracting foreign and private investment in the oil and gas sector. The changes as per the suggestions by the empowered group of ministers (E-GoM) constituted to resolve the natural gas pricing and its allocation issues relate to the bid evaluation criteria (BEC) and a model production-sharing contract (PSC) for the future. Industry sources aver that the price discovery process on arms-length basis will be adopted in future NELP contracts only after the government approves the price formula.

The Empowered Committee has approved amendments which state that until such time as the total availability of natural gas from petroleum production activities in India meets the total national demand as determined by the government, each company comprising the contractor, should sell in the domestic market in India all of the company's entitlement to natural gas from the contract area.

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