New Delhi: India launched its biggest-ever auction of oil and gas assets on Thursday, offering 70 exploration blocks, as it seeks to attract investors at a time of slumping global oil demand during the economic downturn.
India offered 24 deepwater blocks, 28 shallow water blocks and 18 on-land blocks, with the blocks being distributed throughout the country.
“There were options either to go ahead or sit tight. The most effective antidote (to the slowdown) is the generation of economic activity,” said Oil Secretary R S Pandey.
“One should not halt something which is an ongoing economic activity,” Pandey told reporters when asked if the economic slowdown will affect the auction round.
But he said India might not allocate any blocks if it got a poor response to the latest auction.
India is wooing private capital for exploration, and encouraging local firms to buy stakes in foreign oil and gas projects to meet the surging energy needs of Asia’s third-largest economy.
As the country imports 70% of its crude needs, it is keen to tap any remaining domestic reservoirs to reduce its oil reliance.
Pandey expects investors would take a long-term view as the exploration phase requires less investment.
“If response is poor, we have the option not to allocate and if it is good, we will offer 30-40 blocks in the next phase,” Pandey added.
In the latest auction, India for the first time offered exploration blocks in western Andaman, an area which is close to hydrocarbon-rich parts of Indonesia and Myanmar.
So far, five blocks have been awarded in the eastern Andaman and in the current auction, 18 blocks will go under the hammer.
The bids for the new round would close on 10 August and the contract is expected to be signed within four months.
“This is the best time to get exploration assets. It will be available more easily. So, I think medium to aggressive bidding is (will be) there” said V K Sibal India’s upstream regulator.
Previous explorations rounds have been dominated by local firms, mainly Oil & Natural Gas Corp, which had submitted aggressive bids to grab the acreages.
In the current offering, deepwater blocks offered are in Mumbai and Kerala-Konkan basin on the west coast, and in the Andaman offshore region.
Only one block has been offered in the Krishna Godavari basin, off India’s east coast where private firm Reliance Industries has discovered huge gas reserves.
Reliance last week began gas production from its east coast block.
The on-land blocks are in the north-eastern states of Assam and Manipur, the eastern state of West Bengal, the central state of Madhya Pradesh, the western state of Gujarat and only one block in the northern state of Haryana.
India has also offered 10 coal-bed methane blocks for exploration in the fourth round of offering such blocks, Pandey said.
India has so far awarded 212 oil and gas blocks under its new licensing policy introduced in 1999.