Vedanta Cairn, operator of the prolific Barmer field in Rajasthan, bid aggressively, while eight other companies, including state-run ONGC, Oil India, Indian Oil and GAIL (India) also put in their bids for the 55 hydrocarbon blocks offered under the Open Acreage Licensing Policy (OALP), a critical part of the March 2016-launched Hydrocarbon Exploration Licensing Policy (HELP). HELP’s hallmarks are single licence for exploration of all forms of hydrocarbons (including shale gas and coal bed methane), a simple revenue-sharing model and marketing and pricing freedom for the developers. Officials claimed the level of interest shown by bidders “far exceeded expectations”, but the absence of a single foreign oil giant was conspicuous. Reliance Industries stayed away as well.
State-owned ONGC bid for 37 blocks while Vedanta Cairn put in bids for all the 55 areas on offer. As many as 110 bids had been received, the Directorate General of Hydrocarbon (DGH) tweeted. While 92 bids were received for 46 on-land blocks, 18 bids came in for nine offshore blocks. While the bid amounts were not disclosed, PTI reported that Cairn put in very aggressive bids for 13 blocks and a little less so for another nine. “The remaining bids (by Cairn) were mostly routine,” the agency quoted sources privy to the development, as saying.
Since the last round of bidding under the National Exploration Licensing Policy (NELP) in 2010, this is the first major round of hydrocarbon blocks auction to take place in the country. (A clutch of discovered small fields or DSFs was conducted late last year, under HELP, and in February, the Cabinet approved addition of another 60 DSFs to be auctioned later this year).
According to Sudhir Mathur, chief executive officer, Vedanta Cairn Oil and Gas, it is a significant achievement that new acreage has been opened up in the country after almost a decade. “We have been and remain bullish about the exploration and production potential in India and have put our best foot forward in the bidding process. As an industry, we hope that this bidding round brings substantial investment and new players to the country. This will accelerate the much-needed exploration efforts and ultimately domestic production for the country’s economic progress, job creation and energy security,” Mathur said.
Apart from the firms mentioned above, the other bidders for first round of OALP either individually or through consortium include Bharat Petro Resources, Selan Exploration Technology, Hindustan Oil Exploration Company and Sun Petro. The DGH had organised roadshows in Houston, London, Istanbul and Abu Dhabi apart from five Indian cities for the OALP auction. Foreign players had also not participated in the DSF round. Globally, there are 28 ongoing hydrocarbons licensing rounds across various countries and 10 more are slated to be launched this year.
The 55 blocks have a total area of 59,282 sq km compared with 102,000 sq km under exploration in the country at present. These blocks are spread across the country’s sedimentary basins · Assam-Arakan, Mumbai Offshore, Cambay, Rajasthan, Krishna-Godavari Basin, Cauvery, Kutch, Saurashtra, Himalayan foreland and Ganga basins. The blocks will be awarded to those companies that offer the highest share of revenue to the government.
The auctions gain importance given Prime Minister Narendra Modi’s target of cutting the country’s import dependence for oil to 67% by 2022 and 50% by 2030.
The ministry of petroleum and natural gas in July 2017 allowed companies to carve out blocks as per their interest with a view to bringing around 2.8 million sq km of unexplored area in the country under exploration. While companies are allowed to put in an expression of interest (EoI) any time of the year for hydrocarbon areas not under production or exploration, bidding will done by accumulating the EoIs twice annually.
The government plans to award the 55 blocks by July 2018 after evaluation of the commercial bids which will be opened later.