Bids start next week for petroleum exploration

India has 26 sedimentary basins covering an area of 3.14 million square km

With the new year, the recently begun Open Acreage Licensing (OAL) regime for the oil and gas sector will enter an interesting phase, with major companies expected to bid for blocks where other entities have already shown interest.

Big players stayed away from the first stage, of putting in an Expression of Interest (EoI). In this stage, 57 EoIs came, of which state-owned Oil & Natural Gas Corporation and Vedanta had put 41. Interest was shown in new basins — Ganga, Himalayan Foreland, Kutch, Saurashtra.  

"In the second stage, starting January 4, bids will be invited from all players for those areas for which EOIs are submitted for competitive bidding. Based on that, the highest bidder will get a block,” said a source. Major companies that showed interest include Oil India and Hindustan Oil Exploration.  The first round was marked by the absence of sector majors BP, Reliance Industries and Exxon Mobil. 

It was in July that the Government of India had opened 2.8 million sq km of sedimentary basins under the OAL regime, as part of a plan by the government to raise domestic production of oil and gas. In the OAL guidelines, companies will be able to select any area in the country that is presently not under any production or exploration licence.  In the earlier National Exploration Licensing (NELP) rounds, the government selected and demarcated areas for bidding. 

Other than those for Discovered Small Fields (DSFs) early this year, this is the first auctioning of hydrocarbon assets in India after 2010. Of 311 exploration blocks awarded so far under discovered fields, pre-NELP and NELP rounds, only 178 are now operational. The petroleum ministry says after the ninth NELP round in 2010, a total of 117 companies are operating in India, of which 48 are foreign ones.

“We are getting good response from global majors for this stage. Investors came in good numbers during the roadshows in Istanbul and Abu Dhabi. We are also following a revenue sharing model, different from the earlier one. The bidding process is set to be over by April,” said a source. As against the earlier model, investors can carve out the area under the new system.  

India has 26 sedimentary basins over 3.14 mn sq km. Crude oil and natural gas are being produced from seven of these. In the new rounds a total of 2.7 mn sq km will be on offer, comprising 1.5 mn sq km of onshore and 1.2 mn sq km offshore area. By the new Hydrocarbon Exploration Licensing Policy (HELP), the government will not micro-manage daily affairs. It will be a revenue sharing model, also giving pricing and marketing freedom to operators. The recently concluded first round of DSF auctions was conducted under HELP.