Realty, media firms keen on oil hunt

Big oil companies may be keeping away from exploring for oil in India, but guess who's keen on taking advantage of soaring oil prices? These range from realty companies to oil services company. Even a media company "" Dainik Bhaskar "" has evinced interest. The realty companies include Housing Development and Infrastructure Ltd (HDIL) and Hyderabad-based Vasundhara Projects, while the oil services company is Hydrocarbon Resources Development.

Infrastructure companies GMR and GVK, which are both currently developing airports in New Delhi and Mumbai, respectively, have also shown interest.

All these companies have bought geological data for the seventh round of auction of oil and gas blocks under the New Exploration and Licensing Policy (Nelp VII). Buying data is the first step in bidding for blocks under Nelp.

"The real estate sector is slowing down and some of these companies are looking at other revenue streams. The high price of oil makes the business of oil very lucrative," said a Delhi-based analyst, who advises the country's oil companies.

The oil services companies already have experience in oil exploration and production, and they now want to own the block instead of being a contractor. "The fact that the S-blocks offer these companies the chance to get experience of managing oil block is driving interest, even as the big global oil companies are keeping away," said an official in the petroleum ministry.

In the latest round of Nelp, the petroleum ministry is introducing small blocks, called S Type blocks. The size of these blocks range from 30 sq km to 200 sq km, while that of some of largest ones on offer range from 3,000 sq km to 4,000 sq km. Companies can bid for these blocks even if they do not have any prior experience in oil and gas exploration. All that these companies need is financial support, said officials in the Directorate General of Hydrocarbons, the government agency which oversees the Nelp auctions.

The investment required in drilling for oil and gas is minimal. "S-blocks are small and companies will need to spend $5-8 million to drill a couple of wells," said another Mumbai-based analyst. Bringing to production of oil and gas once it is discovered involves bigger expenses.

The government expects to get investment commitments of around $3.5 billion in the auction of the 57 blocks under Nelp VII.

These companies will, however, face competition from established players who want to get the experience of managing an oil field. Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL), which operate refineries and market petroleum products in the country, are also expected to bid aggressively for the S-blocks in Nelp VII. "This gives us a chance to get experience in operating oil blocks. It will then help us in our hunt for oil blocks overseas," a senior IOC official said.