New Delhi: Disappointed with the number of bids received in the latest round of auctions of oil exploration blocks, the petroleum ministry plans to limit the blocks to be offered in the ninth round of India’s new exploration and licensing policy (Nelp).
“We plan to reduce the number of blocks to fewer numbers as compared with earlier rounds. The idea is to have fewer blocks with a high quality of data,” an oil ministry official said on condition of anonymity. “This will result in higher participation from the exploration and production (E&P) firms.”
Nelp auctions started in January 1999 to boost oil and gas exploration and reduce India’s dependence on hydrocarbon imports. The government?allocates rights to explore blocks through auctions under the programme.
“While the procedure for the next round is yet to begin, certainly the quality of data will be much improved for the blocks in the next rounds,” said another oil ministry official, who too declined to be named.
The lack of data has been one reason for limited interest in blocks being auctioned. India has been trying to attract the big E&P firms such British Petroleum Plc, Chevron Corp. and Exxon Mobil Corp. which have so far chosen not to participate in Nelp.
The eighth round of Nelp received 76 bids for 36 of the 70 blocks on offer. State-owned Oil and Natural Gas Corp. Ltd (ONGC), as part of a consortium, bid for 25 blocks and won 17. Single bids were received for 20 blocks. Small blocks saved the day for the government with 10 so-called S-type blocks receiving 37 bids.
The limited response to the eighth round was also attributed to uncertainty arising from the government’s policies on pricing and taxation. The latest round of auctions happened in the backdrop of a global economic slowdown and a bitter legal battle between Mukesh Ambani and his estranged brother Anil Ambani over gas pricing.
“This is a step in the right direction that one is looking at better quality of data as it has been a significant area of concern from bidders in India and overseas,” said Kalpana Jain, a senior director at consulting and financial advisory firm Deloitte Touche Tohmatsu. “But one should not forget that the international investors look for stability in fiscal and regulatory regimes.”
Under Nelp, 71 oil and gas discoveries have been made in 21 exploration blocks with in-place hydrocarbon reserves of at least 600 million tonnes of crude oil equivalent.
The total committed investment in the Nelp rounds for exploration so far is around $10 billion (Rs46,200 crore), of which $5.3 billion has already been spent.
India has oil and gas reserves of 28-32 billion tonnes across 3.14 million sq. km and 26 basins. It imports 75% of its requirements and accounts for some 3.5% of global consumption.