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Govt takes first step towards new oil exploration policy

Govt takes first step towards new oil exploration policy
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First Published: Wed, Jan 06 2010. 10 04 PM IST

New rule: An ONGC oil drilling facility at Bombay High. Under the proposed regime, any explorer can bid for any unallocated area at any time, according to an AOGO working paper. Bloomberg
New rule: An ONGC oil drilling facility at Bombay High. Under the proposed regime, any explorer can bid for any unallocated area at any time, according to an AOGO working paper. Bloomberg
Updated: Wed, Jan 06 2010. 10 04 PM IST
Mumbai: India’s hydrocarbons regulator has invited offers to develop a publicly available database on oil and natural gas that would help explorers bid for potential reserves without having to wait for state auctions.
New rule: An ONGC oil drilling facility at Bombay High. Under the proposed regime, any explorer can bid for any unallocated area at any time, according to an AOGO working paper. Bloomberg
India plans to switch to a round-the-year mechanism for accepting exploration bids in less than 18 months, graduating from the current regime of periodic auction of government-nominated blocks.
A prerequisite for the transition to the new regime—dubbed the open acreage licensing policy (OALP)—is a national data repository (NDR), director general of hydrocarbons S.K. Srivastava said in a statement on the directorate’s website.
The repository will be a public pool of crucial raw information on geological and geochemical characteristics, a key information input for those looking for potential hydrocarbon reservoirs.
“It is difficult to say how many bids we will receive as there are less than half a dozen solution providers for creating” the database, said an official of the Directorate General of Hydrocarbons (DGH), which regulates, oversees and promotes exploration and production of oil and natural gas in the country.
There are currently only 20 nations, including Canada and the UK, that have a similar database and the the pool of service providers with such expertise is small.
“This is a very specialized area with a limited number of players,” said Ashu Sagar, secretary general of the Association of Oil and Gas Operators (AOGO) in India, an industry grouping of 22 members. “But then, building NDR for India is a good project.”
A clearer picture will emerge after 18 January when biddings close, the DGH official said, speaking on condition of anonymity because he is not authorized to speak with the media.
The regulator will select the winning bid between April and June and the repository will go online six months after that, the official said.
The regulator was looking to switch to OALP as it was “a natural progression” in the exploration cycle from the country’s current new exploration licensing policy (Nelp), which has auctioned blocks under eight rounds so far, Mint had reported on 16 August 2009.
Under the proposed new regime, any explorer can bid for any unallocated area at any time, according to an AOGO working paper.
“These (blocks) are user-defined by the first party envisaging interest in the area,” the paper said.
However, sceptics of the initiative say there isn’t enough acreage left after eight auctions for exploration held so far. As much as 2.15 million sq. km of India’s total sedimentary area of 3.14 million sq. km has already been licensed out, leaving only 0.99 million sq. km available for exploration, according to data available on the regulator’s website.
But there is still room for new finds, as well as some old ones. Of the total predicted resources of 205 billion barrels of oil and gas, there are in-place reserves of only 68 billion barrels.
“A lot of the auctioned blocks are also relinquished. Those can go back into the pool of available acreage,” said a sector analyst with the Indian arm of a foreign brokerage.
“Moreover, some of the biggest (global) energy firms have so far steered clear of Nelp,” said the analyst, who declined to be named. “Once NDR is up and running, these companies will be able to look at the preliminary exploratory data and may evince greater interest in India.”
bhuma.s@livemint.com
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First Published: Wed, Jan 06 2010. 10 04 PM IST
More Topics: AOGO | ONGC | OALP | NDR | Nelp |