>ONGC biggest winner in NELP VIII (MERRILL LYNCH)

■ ONGC likely to be biggest winner in NELP VIII; retain Buy
70 exploration blocks have been offered under the eighth round of New exploration licensing policy (NELP VIII), which closed on October 12. The Tax holiday will be available for any gas that may be produced from NELP VIII blocks (uncertainty on tax holiday for gas from NELP I-VII blocks). We believe ONGC is likely to be the biggest winner in NELP VIII with allotment of 17 blocks including 11 in the highly prospective or high potential areas. Cairn India (CIL) is likely to be allotted two blocks with one block in highly prospective areas. RIL did not bid for any block in NELP VIII. We retain our Buy on ONGC.

■ Bids received for 36 blocks; Only one bidder for 21 blocks
Only 5 of the 70 blocks offered under NELP VIII were in highly prospective KG basin and 21 blocks were offered in high potential Andaman deepwater and Cauvery offshore basins. No bids were received for 34 out of the 70 blocks offered. There is only one bidder in 21 out of the 36 blocks that received bids.

■ ONGC may get 17 blocks; 11 in highly prospective areas
Indications are that ONGC is likely to be allotted 17 (operator in 14 blocks) of the 36 blocks for which bids have been received under NELP VIII. ONGC along with its partners is the sole bidder in 13 of these blocks. More importantly ONGC is likely to be allotted 11 of the 13 blocks in the highly prospective or high potential basins for which bids have been received. ONGC is thus
expected to be allotted 4 blocks in the Krishna Godavari (KG) offshore basin (operator in 3, BG operator in 1), 6 in Andaman deepwater (operator in all) and 1 in Cauvery offshore basin (non-operator). If NELP VIII allotment is in line with initial indications, ONGC's blocks in highly prospective areas would rise to 57 (46 NELP) from 46 (35 NELP) now.

■ CIL may get two blocks in NELP VIII
Indications are that CIL may be allotted both of the blocks it has bid for under NELP VIII. CIL is expected to be allotted one shallow water block in the highly prospective KG basin and one deepwater block in Mumbai offshore basin.

■ Other winners – Oil India, GSPC & BHP Billiton,
Oil India is likely to be awarded 9 blocks (all in partnership with ONGC). It will be operator in 2 of these 9 blocks. 1 of the blocks in which it is operator is in the high potential Cauvery basin. BHP Billiton is expected to be allotted three blocks. GSPC is expected to be the allotted 4 blocks, all of them in partnership with ONGC.

To see the full report: ONGC