There is no doubt that the initiative taken by the Government of India in framing the National Exploration Licensing Policy (NELP) has facilitated the entry of private players into the Indian Oil and Gas industry which is, in turn, contributing to India's growth story by reducing mounting import bills and subsidies given to the various sectors, like fertilizer, power, etc. However, the dismal participation by various private and foreign players in the recent eighth round of auctions under NELP, despite their active role in the road shows before the auction, signals a wake up call to the policy makers to rework on the NELP.

The year 2009 is significant in the history of Indian Oil and Gas Sector as it experienced two major events which have provided a major boost to the industry. Firstly, in April, Reliance Industries Ltd. (RIL) began its gas production from its D6 block in the Krishna-Godavari (KG) basin, off the east coast, which is estimated to pump out 80 million standard cubic meters per day (mmscmd) of gas at its maximum capacity, thereby significantly boosting India's gas production. Secondly, Cairn India, in the western state of Rajasthan, has kicked off oil production from its Mangla fields which is estimated to account for 20% of India's oil imports at its maximum production capacity. From these two, it is evident that upstream activities in India have received major attention these days.

The driving force behind this growing attention was the formulation of the National Exploration and Licensing Policy (NELP) by the Union Government during the year 1997-98. The rationale behind the introduction of this policy was to enable private players to participate in the domestic oil and gas sector, which was state-owned till then. The main aim was to meet the increasing energy requirements of the country. As a part of implementation of this policy, the acreages would be allocated to both the public and private sectors on the basis of an open competitive bidding. Till 2009, there have been eight rounds of competitive bidding under which more than 200 blocks have been allocated from time to time (Refer Table 1). Interestingly, till the seventh round, NELP has proved attractive in gaining the interest of Indian private sector, with the private sector giant, RIL, winning the maximum number of blocks, after the state-owned ONGC.

Previously, onshore fields have been the source of natural gas in the country. Subsequently, as the gas in these fields got exhausted, the focus has shifted to offshore fields in order to meet the demand in the country (Refer Figure 1). At present, the majority of natural gas production in India comes from fields off the western coast, including the Mumbai High complex and the Tapti, Panna, and Mukti fields, while the major onshore fields are located in the areas of Assam, Andhra Pradesh, and Gujarat (Refer Table 2). Bay of Bengal has also recently become an important source of gas, particularly the Krishna-Godavari (KG) basin after the discovery by RIL. In the KG basin, three blocks are being operated by Oil and Natural Gas Corporation (ONGC), Gujarat State Petroleum Corporation (GSPC) and Reliance Industries Limited (RIL) (Refer Table 3).

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