Mumbai: Indian energy firms are likely to team up with foreign companies to bid in the country’s largest auction of exploration blocks, a top Indian energy official said.
Oil companies including Exxon Mobil Corp. and Royal Dutch Shell Plc are among global players showing interest during an ongoing global marketing roadshow, said Sunil Kumar Srivastava, deputy director general at the directorate general of hydrocarbons.
Previous licensing rounds were dominated by local firms, he said, adding that he believes tie-ups between foreign and Indian firms may now be in the offing.
The auction of about 70 exploration blocks could generate bids of $3-3.5 billion (Rs14,460-16,870 crore), a government official had said previously. Bidding closes on 12 October.
“The response seems to be very good and people are very, very upbeat about it,” Srivastava told Reuters in an interview. He said 60-70 companies, including all the world’s biggest energy firms, have inspected the auction documents.
Those showing interest during the marketing roadshow included ConocoPhillips, Eni SpA and BP Plc, he said.
In the past, interest among foreign players in Indian exploration auctions has not always translated into bids.
“Indian companies have been going and talking to other companies to give their credentials and strengths and we believe there will be a lot of partnerships,” Srivastava said.
India, which is Asia’s third largest oil consumer and imports two-thirds of its crude oil, is hoping to reduce its dependence on foreign oil and become a new frontier for oil and gas exploration in the wake of two big discoveries: one off its east coast in the Krishna-Godavari (KG) basin and another in Rajasthan.
He said the simmering dispute between the Ambani brothers is not putting off foreign investors.
But some watchers have said government intervention in a battle between Reliance Industries Ltd, India’s largest company by market value and headed by Mukesh Ambani, and Reliance Natural Resources Ltd, led by estranged brother Anil, over the pricing of gas might put off foreign investors.
The brothers are battling over gas from the vast KG basin, where Reliance Industries made the country’s deepest and biggest gas find that is expected to nearly double India’s gas output at full throttle.
“None of the oil companies have asked even one question on this,” Srivastava said.
“Our rules and regulation, provisions...everything is identical for everybody. People have enough faith in government policies, transparency and the system.”
India has extended tax breaks for gas discoveries—in line with concessions on oil finds—in an effort to interest more bidders and has said it will consider introducing a uniform domestic price for natural gas.
The Indian exploration and production sector will need $40 billion in investment by 2012, the Investment Commission of India estimates.
A report by consultancy KPMG expects the Indian energy sector will require between $120 billion and $150 billion over 2007 to 2011 as Asia’s third largest economy expands.
Cairn India, a unit of UK-based Cairn Energy Plc, in late August began pumping crude from its Mangala oil field in Rajasthan, the first major crude oil discovery in the energy-hungry nation in two decades.