Thanks to the fight between the Ambani brothers, NELP VIII has suffered a major setback with only 76 bids received for 36 blocks. There were no bids for 34 gas blocks offered under NELP VIII. This is a major setback after the huge success of Reliance and Cairn India which discovered major oil and gas fields in the Krishna Godavari Basin and Jaisalmer, respectively. The government has been expecting huge response as 100% foreign direct investment (FDI) is allowed in oil exploration.
The government has blamed the lack of interest on the row between the Ambani brothers from the Reliance group. Anil Ambani has claimed that Mukesh Ambani should give him 28 million cubic metres of gas per day at a price of $2.4 per MMBTU. This price is 44% lower than the government price settlement of $ 4.2 per MMBTU.
Another setback was when Reliance Industries returned 14 blocks to the government as it could not discover any gas in these fields. RIL has also mentioned that the company has spent Rs1,400 crore in exploration for 14 blocks. Reliance Industries says that this money cannot be recovered from the government as it is the exploration risk cost. There was a weak response from foreign companies as well. The Government of India may soon go for fresh round of road shows for the remaining blocks.
NELP VIII has covered 24 deepwater blocks, 28 shallow water blocks, eight online blocks and 10 type S blocks spread over 1,63,535 sq km in Assam, Jharkhand, Orissa, Madhya Pradesh, Chhattisgarh, Maharashtra and Tamil Nadu. Earlier the government had planned 100 blocks but it reduced it to 70 blocks.
It was estimated that around $10 billion investment would pour into NELP VIII. In earlier NELP rounds, 68 oil and gas discoveries were made in 19 blocks which will bring in 600 million tonnes of oil and oil-equivalent gas. The Government has planned that around 80% area under exploration will be covered by the XIth Five Year Plan.