On July 31, 2005, the government will announce the winners of the sixth round of the New Exploration and Licensing Policy (NELP). Up for grabs are 20 blocks-six deepwater, two shallow and 12 onshore-in Kerala, Konkan, Mahanadi Basin and the Gulf of Cambay that will, hopefully, reduce the country's dependence on oil imports.

The most heartening feature of the current round of bidding is the presence of a record 26 foreign oil majors; 17 of these are first-timers in India and include British Petroleum and Foresight (both from the UK), Petrobras (Brazil), ENI Spa (Italy), Zakros Holdings Limited (Cyprus) and Birkbeck Investment Limited (Mauritius). This is a welcome change from the past when global interest in the Indian hydrocarbon sector was, at best, lukewarm. For instance only 27 bids were received for 48 blocks offered in NELP-I (See table). Under NELP-III, 45 bids received for 23 blocks.

Why this sudden burst of attention on India? The large gas finds in the Krishna-Godavari (KG) Basin and Barmer district in Rajasthan have acted as the catalyst behind this revival of interest in the bidding process. The Reliance-Niko Resources joint venture discovered an estimated 14 trillion cubic feet (TCF) of gas in 2002 in the kg Basin-the largest such find that year. Cairn Energy of the UK also struck gas in the same area under NELP-I in 1999. Niko Resources of Canada followed this up by discovering gas in an onshore block near Surat (Gujarat) under NELP-II in 2000 within one-and-a-half years of being awarded the block.

In June this year, the state government-owned Gujarat State Petroleum Corporation (GSPC) discovered what it claimed was a 20 TCF natural gas field in the kg Basin. The jury is still out on the authenticity of this figure but if proved correct, it will make this the largest strike in India. Investments, too, have begun to flow into this sector. Between January 1999 and March 2005, companies like Reliance, Oil and Natural Gas Corporation (ONGC) and Cairn Energy invested Rs 4,652.64 crore on infrastructure to exploit these discoveries. The total investment over the previous 40 years was Rs 7,262.45 crore.

Thus, greater transparency in the bidding process and recent finds have given a fillip to exploration and production activities in India. But the government still needs to address several issues if it wants India to remain on the radar of the really big players. First, there is an urgent need to set up an independent regulator that will lay down the rules and arbitrate between players in case of disputes. Secondly, greater availability of seismic data and reduced red tapism will help increase India's attractiveness as an investment destination.

"What will really turn the tide in India's favour are a few more finds," says Rajeev Thakur, Head of Research at credit rating agency ICRA.

NELP-V is due on July 31, 2005. It's for the government to seize the moment.