Aiyar, the salesman

The petroleum ministry under Mani Shankar Aiyar has acquired a new zeal and sense of purpose, judging by the way the fifth round of the new exploration licensing policy (NELP-V) is being handled.

Consider the changes that the ministry has brought in this time, to take on board some global best practices and the concerns of prospective overseas investors.

While the insistence on a bank guarantee for participating companies has been relaxed, the ministry has sought to bring in transparency by making available all geo-scientific data online.

Work stations will be provided at data centres in London, Houston, Calgary, and Dubai. So far, the ministry has been providing only hard copies of such data.

Weightages for all bid evaluation criteria, including those for sub-criteria, are being made public for the first time. That the government means business is also evident from the fact that it has set up a single window clearance facility at the petroleum ministry.

The icing on Mr Aiyar's sales plan is his promise to reduce the time taken to award contracts under the new exploration licensing policy to four months, from six months taken under earlier rounds.

The contracts would be signed in another two months and the successful bidders should be able to start operations by January next year. All this shows a purposefulness that has so far been missing in the petroleum ministry.

The marketing of NELP-V will also acquire a new dimension with the minister deciding to involve the Indian diplomatic community abroad in the selling effort, and this adds another facet to Mr Aiyar's energy diplomacy""a good example of which was the gas supply agreement signed with Myanmar and Bangladesh last week. Meanwhile, a great deal hangs on NELP-V's success.

Domestic companies like ONGC have not had great success in their exploration efforts, as is evident from the fact that ONGC has been able to tap only 6 billion tonnes of oil and gas in the past 45 years even though it has 57 per cent of the country's oil exploration acreage.

As a result, India's dependence on imported oil has jumped from just 30 per cent of its domestic demand in 1991 to 70 per cent now, and the gap between consumption and production has been growing.

Crude production rose at a compounded annual growth rate (CAGR) of around 2.3 per cent from 1994 to 2003, while consumption had a CAGR of 8.3 per cent.

The importance of what is being attempted can be judged from the numbers. India has invested more than $3 billion in exploration ventures abroad and has said it will continue to spend $1 billion a year on more acquisitions.

But China, which has already invested about $15 billion in foreign oilfields, is expected to spend 10 times more.

Experts say over 82 per cent of the country's sedimentary basin will require deep sea exploration, and this is where the country needs overseas oil companies with superior deepwater technology.

But success cannot be taken for granted, especially since the international oil majors have so far been ignoring India. Another factor that could play spoilsport is the absence of an independent regulatory regime in the sector.

Foreign companies don't like politicians playing god and the minister would do well to set this right before it's time for NELP-VI.