CCEA approval for oil block auction likely by February 15: Veerappa Moily

NEW DELHI: The Oil Ministry hopes to receive CCEA approval for its proposal to auction 86 oil and gas blocks by February 15.

"We have launched the project...Of the 86 oil and gas blocks which will be offered for bidding, 46 blocks have obtained clearance in all respects," Petroleum and Natural Gas Minister M Veerappa Moily told reporters here.

He said there had been problems earlier in getting bidders for some blocks because requisite clearances were not in place.

"Some projects where the necessary clearances were not in place were put out for bidding. Thereafter, we got into problems and ultimately the Cabinet Committee on Economic Affairs (CCEA) had to take up and majority of them were cleared," Moily said.

The minister said he is hopeful that this time, CCEA approval will come by February 15 and road shows will start after that.

The CCEA will also consider whether to continue with the current production sharing framework, which allows block operators to recover costs before sharing profits with the government.

The high-level Vijay Kelkar Committee has favoured the current production sharing regime for high-risk deep sea oil and gas exploration.

On the other hand, a panel headed by Prime Minister's Economic Advisory Council Chairman C Rangarajan last year proposed a revenue-sharing model for awarding future oil and gas block contracts.

"The Kelkar committee report will be an input for the CCEA proposal," Moily said when asked if the panel's suggestions will be considered before deciding on the auction.

The blocks on offer include part of a 9,000 square kilometre area in the Barmer block that Cairn had relinquished and is seeking to get back.

The auction will also include most of the 6,198.88 square kilometres of the KG-D6 block, which holds five discoveries -- D4, D7, D8, D16 and D23.

Of the 46 blocks that have received clearances, 17 are onshore, 15 shallow water and the remaining 14 deepwater.

The panel headed by Rangarajan recommended that contracts for blocks should be awarded to bidders quoting the highest amount of oil or gas they are willing to offer to the government from the first day of production.