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India resumes oil and gas block auctions after eight-year hiatus

17th January 2018

By: Ajoy K Das

Creamer Media Correspondent

     

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KOLKATA (miningweekly.com) – India will on Thursday hold its first oil and gas auction in eight years, with 55 blocks up for grabs.

The auction will also mark the first time that such assets will be allocated under the newly framed Open Acreage Licensing Program (OALP).

Under OALP, part of the new Hydrocarbon Exploration Licensing Policy, exploration companies can carve out blocks of their choice and once expressions of interest (EoI) have been submitted and accepted, the government will hold auctions every six months to allocate the assets to successful bidders.

At the same time, under the liberalised exploration policy, any exploration company finding exploratory projects viable for subsequent development will have full production, marketing and pricing freedom for any production from the secured block and will enter into a revenue sharing contract with the government.

This in contrast to a previous cost and production sharing contract, which faced a plethora of controversies and legal challenges.

Sources say that the government has received 57 EoIs from six companies of which two were subsequently withdrawn. The auction will start on Thursday morning for the rest of the EoIs.

Covering 95 000 km2, the 55 oil and gas blocks include a mix of onshore, shallow water and deep-water assets, with the largest number of blocks –19 – located in the north eastern province of Assam, the sources add.

The bidders have until the end of March to submit their bids, which will be evaluated on the minimum work programme and the revenue share offered to the government. Both the parameters are accorded equal weight.

The director-general of Hydrocarbons will evaluate the bids and will announce the winners by May.

While details of companies which have submitted EoIs and are likely to participate at the auctions were not readily available, sources indicate that most major international oil and gas exploration and production (E&P) companies have given the auction a miss.

Sources indicate that among the domestic E&P majors likely to be part of the auction are government-owned ONGC, Vedanta and Cairns India, which together are interested in securing 41 blocks. Oil India and Hindustan Oil Exploration Company are among the smaller E&Ps thought to have submitted EoIs.

It is learnt that while global majors like BP, Shell and Total and even domestic giant Reliance Industries had visited the data room, none of them have submitted EoIs.

A section of government officials attributed the tentative nature of the upturn in global crude oil prices as one of the reasons for lukewarm interest among global investors despite India's auction of oil and gas blocks coming after a hiatus of eight years.

The last round of allocation was in 2010 under the erstwhile New Exploration and Licensing Policy. During 1997 to 2010, the government had allocated 254 oil and gas blocks through nine rounds of auctioning.
 

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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