(1)

The administering authority shall grant a production lease to any person who—

(a) is eligible under section 6 for grant of operating right;

(b) produces, to the satisfaction of the administering authority, evidence that such person possesses the requisite technical ability and financial resources to undertake production operation based on such scientific parameters as may be prescribed;

(c) submits a work programme for the systematic development of the mineral deposits of the area applied for, prepared in such manner and supported by such data as may be prescribed and obtained through exploration operation, setting forth the activities proposed to be carried out during the period of the lease including the resources assessment of the area, the intended schedule of commercial production, methods and technologies to be used for commercial production and processing,

(d) undertakes not to deviate from work programme for production lease approved by the administering authority; and

(e) has fulfilled, to the satisfaction of the administering authority, all the statutory obligations under any operating right previously—

(i) has undertaken exploration operation to establish mineral resources in such offshore area;

(ii) has not committed any breach of the terms and conditions of the exploration licence; and

(iii) has not become ineligible under the provisions of this Act.

(2)

The administering authority may, if there is any reasonable cause to believe that any person, to whom a production lease has been granted, has violated any undertaking given under clause (d) of sub-section (1), terminate the production lease.

(3)

The period for which a production lease may be granted shall not exceed thirty years.

(4)

A production lease granted under sub-section (1) may be renewed for a period not exceeding twenty years, if, after a review, the administering authority is satisfied that the lessee has been conducting the production operation in accordance with the work programme approved by the administering authority regarding such lease.

(5)

The area under a production lease shall not exceed a block of fifteen minutes latitude by fifteen minutes longitude:

Provided that if the administering authority is of the opinion that in the interest of the development of any mineral, it is necessary so to do, it may, for reasons to be recorded in writing, permit any person to acquire an area in excess of the area specified in this sub-section.