Gujarat withdraws approval 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In a setback to the latest oil and gas block auction round, the Gujarat Government has withdrawn clearance for the 9 areas falling in the state that are part of the offerings under 10th round of New Exploration Licensing Policy (NELP).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 January 16 given its approval for offering 9 blocks in the Cambay basin of the state under NELP-X. But soon after, it withdrew the approval, a top Oil Ministry official said.

The central government, which as per the Constitution is the owner of both offshore and onland hydrocarbon resource, had 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 the 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 the 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 production-linked revenue sharing model wherein oil companies would have to pay the Government an agreed amount, depending on the level of output, and not on the investment in the exploration block.

HBL