KOLKATA (miningweekly.com) - The new Indian government would undertake a comprehensive review of the national oil and gas policy on a priority basis and keep blocks already up for auction in abeyance.

Senior bureaucrats and political office-bearers said that the incumbent government’s topmost priority would be to frame a new exploration and production policy which would address oil and gas blocks either stalled or facing roadblocks towards accelerated production.

Towards this end, the allocation of new oil blocks under the tenth round of the New Exploration Licensing Policy (NELP) would have to wait until such time that the interests of energy companies already operating in the country were adequately addressed, the officials said.

In January this year, the outgoing government placed 46 oil and gas blocks up for auction under NELP IX covering 23 944 km² on land, 47 745 km² of shallow water and 94 364 km² of deep water.

But the process was stalled in the absence of a proper administrative and legal framework for allocation of these blocks to new domestic and foreign investors.

It was pointed out that the auction of new blocks could not be justified when investors who had already been allocated blocks were unable to get them into production.

The officials were referring to resource major BHP Billiton relinquishing nine oil and gas blocks earlier allocated, claiming that lack of government support and delays in securing mandatory approvals did not make it viable for BHP Billiton to pursue its Indian ventures.

It was pointed out that Prime Minister designate Narendra Modi, who had been a four consecutive term Chief Minister of the western Indian province of Gujarat, had been a strong advocate of the development of the energy and hydrocarbon sector, with the province being home to some of the largest companies operating in that sector.

India majors operating in the hydrocarbon and allied sectors, such as Reliance Industries, Essar, Indian Oil Corporation, ONGC and Petronet LNG have their largest presence in Gujarat. The province accounted for over 65% of Indian petrochemical production and 52% of domestic chemical production.

The Modi-led rightist Hindu nationalist Bharatiya Janata Party was given a landslide majority in the month-long elections ending May 16. The party won 282 of the 543 seats in Parliament, a clear majority over any other single political party for the first time in Indian elections since 1984.

Modi, along with his Cabinet Ministers would be sworn in on Monday, May 26.

Significantly, soon after the NELP IX auctions were announced, the Gujarat government, then headed by Modi, withdrew approval of six blocks along the coastline of the province demanding a share of revenue from the blocks, which would ordinarily accrue to the federal government.

The outgoing government had failed to finalise whether blocks should be allocated to investors on a revenue-sharing-agreement or a production sharing basis, one of the major reasons for delays in the NELP IX auctions.