Biggest-ever round of oil and gas blocks may be open for bidding in Nov

The government is expected to open the ninth round of bidding under the Open Acreage Licensing Policy (OALP IX) in November, officials said, in another attempt to invite foreign investments into India's oil and gas exploration and production (E&P) sector.

The 26 blocks earmarked by the Directorate General of Hydrocarbons (DGH) for exploration and development of oil and gas under OALP IX, constitutes the largest-ever area offered by the government. Spanning more than 2.2 lakh square kilometres (sq km), OALP IX will be double the area under exploration and production (E&P) that has been awarded under the previous eight rounds.

To date, 134 E&P blocks comprising an area of 2.07 lakh sq km across 19 sedimentary basins were awarded by the government.

First announced in October 2022, OALP IX has 15 areas in ultra-deepwater, eight in shallow sea and three blocks on land, which officials said is a good mix of offerings that may generate more foreign interest. However, industry insiders have pointed out that blocks from the previous round of OALP VIII are yet to be awarded.

Catching foreign interest

It has been difficult to get foreign players to participate till now. OALP VIII ran for a year till July 5, 2023.

First opened on July 7, 2022, the round offering 10 blocks saw the deadline for submission of bids extended more than four times. While officials have blamed interested bidders for requesting the extensions, industry sources say the government was hoping to attract more foreign players.

Public sector upstream major ONGC had bid for nine of the blocks. Oil India Limited (OIL) had bid for one block in the Assam Shelf. Vedanta bid for one block in the Cambay, privately-owned Sun Petrochemicals had bid for pblock in Kutch, and the joint venture of Reliance Industries (RIL) and BP placed a bid for the offshore Krishna-Godavari block.

The DGH is moving to activate OALP IX relatively since it hopes to significantly expand India's oil production in the next few years.

“It will also allow foreign companies to take more time to bid. In the previous few rounds, it was seen that most bids take time to be finalised. So, rather than wait, it would make sense to begin the process soon,” an official said.

“Globally recognised and accepted dispute resolution mechanisms, and play-based exploration are also being facilitated to attract global companies like ExxonMobil and Shell and BP. The government has mandated lower royalties for onshore gas blocks to enhance domestic production,” he added.

Expanding exploration

India has an estimated sedimentary area of 3.36 million sq km, comprising 26 sedimentary basins, out of which, 1.63 million sq km. area is on land, 0.41 million sq km is in the shallow offshore area up to 400m from the coast, and 1.32 million sq km in the deepwater area beyond 400m.

Over the past few years, the unexplored part of this vast area has come down significantly as a result of the surveys carried out by DGH and acreages awarded.

In its move to achieve the target of 1 million square kilometers under exploration by 2030, and reduce the ‘No-Go’ areas in the Indian offshore sedimentary basins by 99 per cent, the Centre has rolled out a series of measures to make oil and gas exploration easier for companies.

This includes providing pre-approved clearances of blocks, permitting self-certification to cut the application process and granting companies the freedom to carve out operational areas from within the blocks.

Facilitating easier oil and gas exploration stems from the government's aim to harness domestic production capabilities as demand outstrips supply by a wide margin.

Currently the world's third-largest oil consumer, India's share in the global energy demand will rise to 12 per cent by 2050, up from the current six per cent, BP Energy has projected. Oil demand in India is projected to register a 2x growth to reach 11 million barrels per day by 2045, according to the Organization of the Petroleum Exporting Countries (OPEC) grouping.