Oil and Natural Gas Corp., India’s largest exploration and production (E&P) company, plans to concentrate only on the onshore blocks that will be auctioned in the seventh round of the new exploration licensing policy (Nelp) scheduled in August because of rising rentals on offshore rigs, shortage of specialized engineers, and work commitments on its existing offshore blocks. An offshore block is one that lies off the coast.
“Most of the deepwater offshore blocks are being offered in the west coast. These blocks are not promising as there is limited availability of geological data on these blocks, making them high-risk. We have even relinquished some of (our existing) deep-water blocks. In such a situation, our focus will primarily be on the onshore blocks,” said a senior ONGC executive who did not wish to be identified.
The government itself may decide to lease out fewer exploration blocks than initially planned in the coming auction due to shortage of deep water rigs, needed for offshore exploration, as previously reported by Mint on 14 July. The government had originally planned to offer 70 blocks over around 300,000 sq. km in the seventh round of Nelp. More than 30 of these blocks are off the west coast, in water that is 90-100m deep.
“ONGC’s new strategy for the next Nelp round could be an offshoot of prudent portfolio management. Every E&P company balances its offshore and onshore assets,” said Ajay Arora, partner at accounting firm Ernst & Young. ONGC had aggressively bid for the offshore blocks in the previous Nelp rounds.
ONGC currently operates 62 blocks in the country and has participative interest in 10 others. In a related development, the company is also in talks with the overseas E&P companies for jointly bidding for the onshore blocks.
“Though earlier we were in talks with the overseas companies for deep offshore blocks, the present talks are for onshore blocks. We will be bidding aggressively for all the onshore blocks,” the ONGC executive said.