Global roadshows soon for oil block auction under new regime

The Modi government will soon kick-start roadshows to woo global investors across six geographies — Singapore, Houston, London, Dubai, Calgary and Perth — for its first ever auction of oil and gas blocks under the new revenue-sharing regime.

The upstream regulator, the Directorate General of Hydrocarbons (DGH), has already received more than 225 registrations for the launch of the bidding on May 25. It would be launched by Oil Minister Dharmendra Pradhan in Delhi, where 89-million tonne (MT) of reserves worth Rs 77,000 crore are likely to go under the hammer.

Chief executive officers (CEOs) of all big firms and personnel from embassies are likely to attend the launch of Discovered Small Fields (DSF), according to the DGH. Global accounting and consultancy firm KPMG has been chosen by the government to advise on the bidding round and manage the global roadshows.  

WHAT IS ON OFFER

• Total 46 contract areas in onland and offshore, with over 85 MT of in-place reserves
   
• Revised business model under revenue-sharing contract regime, single licence for all hydrocarbons
   
• International competitive bidding with no mandatory domestic participation
   
• No mandatory prior technical experience required for bidders
   
• Minimal royalty in line with earlier NELP regime; no cess
   
• Customs duty exemption for goods and services imported for operations

“KPMG has been selected by the government to manage the marginal fields’ bidding round. The scope of the work includes taking the blocks to the market and suggesting ways to attract investor interest during the international roadshows that will begin soon,” said an executive close to the development, adding the entire process would be run over the next three months.

While analysts say the investment sentiment in the oil sector has been impacted by low crude oil prices, firms appeared to be cautious but optimistic on the bidding prospects.

“Given the fact that the last bidding round in India under the erstwhile New Exploration Licensing Policy regime was in 2012, exploration & production  industry players will look at this window of opportunity. For those players who become bidders, it will be definitely a reflection of the business proposition which these small and marginal fields have to offer to such bidders,” Manish Maheshwari, CEO-E&P at Essar Oil, told Business Standard.

Essar welcomes the Hydrocarbon Exploration Licensing Policy (HELP) announced by the government, he added. “HELP is a progressive regime and signals the readiness of the government to calibrate the fiscal, contractual and operating framework in sync with challenging global E&P market dynamics,” he said.

Apart from being the first ever auction of oil and gas reserves under the NDA government, the bidding round for 67 blocks classified into 46 contract areas would also act as a test for the future launch of auctions under HELP. Of the 67 blocks on offer, 28 discoveries are in Mumbai offshore and 14 are in the Krishna Godavari basin off the Andhra coast. And 10 discoveries are located in the Assam shelf area, according to the oil ministry.