By Nayantara Rai and Abhijit Neogi, CNBC-TV18

The New Exploration Licensing Policy or NELP VII is on track to meet the 25th April deadline. The petroleum ministry is confident that the withdrawal of tax sops will not dampen investor sentiments.

The recent budget dealt a deadly blow to upstream gas companies in India by withdrawing a crucial seven year tax holiday for the exploration and production of gas, but the petroleum ministry said that, this will not affect investor appetite for NELP VII, the latest round of blocks on offer for exploration of crude and natural gas. Petroleum secretary MS Srinivasan said that, NELP VII, though slightly delayed, will now close as per schedule on 25th April.

While the initial response is lukewarm, the petroleum ministry is confident that the momentum will pick up. This confidence seems to stem from past experience. Even during NELP VI investors responded just before the deadline expired. But not many in the sector, including state run upstream behemoth ONGC, share this optimism.

RS Sharma CMD, ONGC said that, the incentives, particularly to gas, must increase manifold and it will affect sentiment unless it is restored.

And in a world where lack of any major crude discoveries in the last 30 years means demand supply mismatches will only continue to grow, Sharma is confident that this will ensure that crude prices shoot further up north.

ONGC itself wants market determined pricing for most of its gas which are currently under the administered pricing regime because international gas prices are currently ruling in double digits. The cabinet is expected to take up this issue soon.