World Energy Outlook 2007

and production, and in liquefied natural gas terminals. In 1998, GAIL,
ONGC, IOC and Bharat Petroleum Corporation Limited (BPCL) formed a
major joint venture, Petronet LNG, to build and operate LNG import
terminals. Qatar's Rasgas is supplying gas to the first plant, Petronet LNG
Dahej, commissioned in 2004. A second plant was commissioned by Shell in
2005 at Hazira. 10 Both plants are located in Gujarat.
Box 15.2: India's New Exploration Licensing Policy
In response to growing concerns over long-term oil supply and the few
discoveries resulting from previous exploration rounds, the Indian
government adopted in 1997 a New Exploration Licensing Policy (NELP),
based on production-sharing contracts (PSCs). Acreage is awarded under a
competitive-bidding process organised by the Ministry of Petroleum and
Natural Gas.
The NELP has been in operation since January 1999, when the first round
was launched. In the first six rounds, 162 PSCs were signed. In response to
an initial lacklustre response from major oil and gas companies, the
government removed the ceiling on foreign direct investment in virtually all
upstream activities, allowing up to 100% equity by foreign investors.
Foreign companies were also given the freedom to sell oil and gas at market
prices on the Indian market. In addition, conditions for all deep-water
projects have been made very attractive by charging a royalty as low as 5%
for the first seven years of commercial production against 10% for other
offshore projects and 12.5% for those onshore. The 6 th round, launched in
February 2006, proved to be the most successful, resulting in 165 bids for
the 52 blocks offered and attracting 20 new companies among the
35 foreign companies which submitted bids. The 7 th round is expected to
be launched in late 2007, with 80 to 90 blocks on offer. The government is
considering introducing an Open Acreage Licensing Policy (OALP). This
would allow investors to bid continuously for exploration opportunities,
with the freedom to choose the areas that interest them.
About 30 oil and gas discoveries have been made since the NELP was
adopted, the most significant being the gas discovery in late 2002, by the
Reliance-Niko consortium, of almost 10 tcf (283 bcm) of recoverable gas
reserves in the Krishna-Godavari basin in Andhra Pradesh State on the east
coast. Since then, several more discoveries have been made in the same basin
and expectations are high that a second discovery of a size similar to
Reliance's find will be made. The largest oil discovery was made by Cairn
Energy in Mangala field in Rajasthan in 2003. The find is reckoned to have
about 350 million barrels of oil; production is scheduled to start in 2009.
15
10. See Chapter 17 for more information about LNG plants that are planned or under construction.
Chapter 15 - Overview of the Energy Sector 453