Tepid response: Only one private bid for oilfields in 5th OALP round

By: |
July 2, 2020 1:30 AM

For the smallest oil field offered in this OALP round, the director general of hydrocarbons (DGH) has received bids from Invenire Petrodyne and ONGC.

This block in Gujarat is spread over only 18.4 sq km while the cumulative area of the oil fields offered in the auction is 19,789 sq km.This block in Gujarat is spread over only 18.4 sq km while the cumulative area of the oil fields offered in the auction is 19,789 sq km. (Representative image)

The Union government received bids from only one private firm and two state-owned companies for the eleven oilfields offered under the fifth round of Open Acreage Licensing Programme (OALP) auctions. State-run Oil and Natural Gas Corporation (ONGC) was the only bidder for eight blocks while Oil India was the sole bidder for two blocks. For the smallest oil field offered in this OALP round, the director general of hydrocarbons (DGH) has received bids from Invenire Petrodyne and ONGC. This block in Gujarat is spread over only 18.4 sq km while the cumulative area of the oil fields offered in the auction is 19,789 sq km.

This is the second round of OALP auctions after the Cabinet, in February 2019, amended the revenue sharing model for hydrocarbon exploration and capped the government’s revenue share at 50%. No private player had participated in the previous OALP round where all the seven blocks offered were awarded to ONGC. As many as 94 blocks covering an area of 1.4 lakh sq km were awarded in the four OALP auctions completed so far. In the first three rounds Vedanta Ltd was awarded 51 blocks and two blocks went to the joint venture between BP Exploration and Reliance Industries.

The 2019 Cabinet decisions also stated that contractors bidding for blocks in category 2 and 3 basins — which are unexplored and without much geo-scientific data — will only pay royalty and statutory levies and do not have to share any revenue unless windfall gains are made. To attract more players, the government had also decided to provide concession in royalty if production commences within specific timelines. Indigenous crude oil production caters to about only 15% of the country’s requirements and the 32.2 metric tonne (MT) of crude oil produced in the country in FY20 was 6% lower than the production from a year-ago period.

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