New Delhi: Determined to make a success of the auction of 67 small oil and gas blocks on offer, the oil ministry is set to organise a match-making meeting on Wednesday, bringing together private equity investors, financial institutions, oil field service providers and bidders who have shown an interest in the assets.
The government is going the extra mile to facilitate tie-ups among the major players to ensure that investments flow into these blocks at a time global energy firms are cutting back on capital spending because of sustained bearishness in oil and gas prices.
The offer, which was to be originally concluded on 31 October, has been extended to 21 November to make sure those who have shown interest in the road shows in September and October get enough time to study geological data and finalise their bids, said an official, requesting anonymity.
The blocks are estimated to hold over 625 million barrels of ‘in-place’ oil and oil equivalent gas, spread over 1,500 sq. km. The blocks with many hydrocarbon discoveries are offered under liberal contractual terms.
The fields were earlier returned to the government by state-owned Oil and Natural Gas Corp. for unviable administered price of gas that prevailed. To sweeten the offer, the government has permitted free pricing of gas as well as freedom to sell the fuel to any customer without government intervention.
This is a departure from the practice of the authorities setting a list of priority industries such as fertilizers, liquified petroleum gas, power and condensed natural gas for allocation of gas from fields auctioned under the previous licensing policy.
The present auction of hydrocarbon resources, the first since 2010, is a litmus test for the government, keen to increase fuel production and reduce India’s import dependence from 77% to 67% by 2022.
“Many potential investors who attended road shows have expressed interest in larger blocks as those on offer are small and marginal ones. We will be offering larger ones once the current exercise is concluded,” said the official quoted above.
Upstream oil and gas regulator, the Director General of Hydrocarbons Atanu Chakraborty told Mint in an interview on 30 September that rules are being framed for offering India’s entire unexplored sedimentary basins in one go to investors, who could chose the assets they want under the new open acreage policy approved by the cabinet in March.
“The basis of that is the national data repository (NDR), which is in a very advanced stage of completion. Now we are entirely focused on making the auction of discovered small fields a success. It will yield a lot of learning too. This campaign has all the components of the new hydrocarbon exploration licensing policy (HELP)--it offers a unified licence for all forms of hydrocarbons, free pricing, market access and revenue sharing terms. The Indian market is a fast growing one and any investor with a long-term view should come to India now,” said Chakraborty. HELP, also approved by the union cabinet in March, forms the basis for all future auctions of large hydrocarbon blocks.