Oil and gas block auction receives poor response

Oil and gas block auction receives poor response
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First Published: Mon, Oct 12 2009. 05 17 PM IST
Updated: Mon, Oct 12 2009. 05 17 PM IST
New Delhi: State-run ONGC swept India’s largest ever auction of oil and gas blocks that saw poor response from private and overseas firms, a trend that was variously attributed to the Ambani gas dispute and the Oil Ministry’s policies.
Reliance Industries, which had won 45 blocks in the previous auction rounds, did not bid for any oil and gas blocks and made a largely symbolic bid for one coal bed methane (CBM) block.
Of the 70 blocks offered in the 8th round of the New Exploration Licensing Policy (NELP), only 36 attracted bids with ONGC and partners bidding for a maximum 25.
Eight out of the 10 coal bed methane (CBM) blocks that were offered simultaneously attracted 26 bids -- the maximum six bids coming from Essar Oil. ONGC in partnership with Jindal Petroleum and Nevyeli Lignite bid for 3.
“The (gas) utilisation policy and the pricing are very well clarified in our Production Sharing Contract but these have been regrettably openly challenged,” director general of Hydrocarbons V K Sibal told reporters, without naming Anil Ambani group, which has challenged the government’s right to decide on utilisation and pricing of gas.
Anil Ambani group, however, attributed the tame response to “Petroleum Ministry’s open interference by curtailing marketing and pricing freedom...”
Only four foreign firms including BHP Biliton of Australia, BG Group and Cairn India bid for offshore blocks.
As per the provisional results, ONGC and partners won six of the eight deepwater blocks that received bids. All of these were in Andaman sea while it was minority partner in a KG basin block that went to BG Group. Cairn won the other deepwater block.
BHP Biliton Petroleum won three shallow water blocks off west coast while Cairn won a KG basin block. ONGC and partners won five shallow water blocks. ONGC was also a minority partner with Oil India Ltd which made a winning bid for the Cauvery basin shallow water block.
Of the 47 bids received for 15 onland blocks, 37 were for small S-type blocks for which there was no stringent criteria of previous oil and gas experience for bidding.
The auction of oil, gas and coal-seam gas areas ended today, about a week before Supreme Court hears lawsuits over a natural gas contract between the firm run by estranged brothers Mukesh and Anil Ambani.
RIL won the KG-D6 block in the first round of NELP in 2000. Anil’s RNRL claims it has an agreement that requires RIL to sell 28 million cubic meters a day of gas at $2.34 per million British thermal units for 17 years. RIL, which started production at the field in April, said the gas cannot be sold at less than $4.20 per mmBtu price set by the government in 2007.
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First Published: Mon, Oct 12 2009. 05 17 PM IST
More Topics: ONGC | Ambani | Gas dispute | NELP | V K Sibal |