Vedanta requests for more time, delays signing OALP contract

The signing of the first-ever contracts under the Open Acreage Licensing (OALP-I) has been unusually delayed. The contract-signing ceremony was scheduled for September 6. Barely 48 hours before the contracts could be signed with Vedanta, Oil and Natural Gas Corporation (ONGC), Oil India (OIL), GAIL (India), Hindustan Oil Exploration Company (HOEC), and Bharat PetroResources, the hydrocarbon regulator cancelled the event, creating confusion among many industry players. 

According to multiple sources close to the development, the Anil Agarwal-led Vedanta has asked for more time since it required clearance from its board for investment and contract signing. Vedanta’s request could not be overlooked since it has won 41 out of a total of 55 blocks on offer.   

When contacted, a Vedanta spokesperson said the company has all the necessary approvals with respect to the bid submission. “We are very excited about the 41 blocks awarded to us, and are looking forward to sign the revenue-sharing contract, according to the date scheduled,” the spokesperson added. 

The spokesperson of the Ministry of Petroleum and Natural Gas did not respond to emailed queries on the reasons for the delay. The Directorate General of Hydrocarbons (DGH) later rescheduled the signing ceremony to September 24. “The company could have taken clearance both for bidding and making investment in the blocks from the board,” said a person close to the development. According to industry estimates, the 41 blocks may require an approximate investment to the tune of around $500 million during the exploration stage.

It might also be a communication lapse as the DGH announced the date without consulting the company, said another person.     

Among the remaining companies, OIL won nine blocks and ONGC two blocks, while three companies — GAIL (India), HOEC, and Bharat PetroResources — got one block each. The open acreage policy is part of the government’s effort to meet a share of the increasing hydrocarbon demand through domestic production and to reduce imports by 10 per cent by 2022.

An industry source said Vedanta was well within its rights to seek an extension since the bidders can sign within 45 days of being declared a winner under a government notification issued on June 30, 2017. Vedanta has time till mid-October to sign the contract. 

After winning the blocks, Vedanta Chairman Anil Agarwal had said the government decision will strengthen the vision of Vedanta’s oil and gas division to contribute about 50 per cent of the country’s crude oil production. 

The launch of the OALP is a new phase in India’s oil and gas exploration since it ends the practice of offering pre-defined blocks under the New Exploration and Licensing Policy and instead gives an opportunity to companies to identify their own exploration areas.

STEP ON THE GAS

Total number of blocks: 55 

Total area on offer: 60,000 square kilometres

10 sedimentary basins covered: Assam-Arakan, Mumbai Offshore, Cambay, Rajasthan, Krishna Godavari, Cauvery, Kutch, Saurashtra, and one each in Himalayan Foreland and Ganga basin