Cabinet approves Delegation of Powers to Minister of Petroleum and Natural Gas and Minister of Finance
The government is likely to sign on September 24 contracts for 55 oil and gas exploration areas awarded under India's maiden open acreage auction OALP-1, people with direct knowledge of the development said.
The signing of contracts with the winners of Open Acreage Licensing Policy (OALP) round-1 was initially scheduled for September 6 but it was postponed. The event is now scheduled for September 24, sources said.
The signing had to be postponed pending Vedanta getting shareholders' nod to sign the Production Sharing Contracts (PSC) with the government.
Mining mogul Anil Agarwal-led Vedanta Ltd had walked away with 41 out of 55 oil and gas exploration blocks offered in OALP-1 when the bid evaluation was completed last month. State-owned Oil India Ltd had won nine blocks, while Oil and Natural Gas Corp (ONGC) managed to win just two.
State gas utility GAIL, upstream arm of Bharat Petroleum Corp Ltd and Hindustan Oil Exploration Co (HOEC) received one block each, according to the list of winners put out by upstream regulator, the Directorate General of Hydrocarbons (DGH).
Vedanta, which had put in bids for all the 55 blocks, won right to explore and produce oil and gas in 41 of them, sources said, adding the company has called a shareholder meeting next week to approve of the signing of contract for the blocks where it will be investing USD 551 million.
At the close of the bidding on May 2, ONGC had bid for 37 blocks either on its own or in consortium with other state-owned firms. OIL bid for 22 blocks in a similar fashion.
Vedanta was the sole bidder for two blocks and had either ONGC or OIL as a direct competitor in the remaining.
Except for the two blocks that received three bids each, all the other 53 had just two bidders.
India had in July last year allowed companies to carve out blocks of their choice with a view to bringing about 2.8 million sq km of unexplored area in the country under exploration.
Under this policy, companies are allowed to put in an expression of interest (EoI) for prospecting of oil and gas in an area that is presently not under any production or exploration license.
The EoIs can be put in any time of the year but they are accumulated twice annually.
As many as 55 blocks were sought for prospecting of oil and gas by prospective bidders, mostly by state-owned explorers, ONGC and OIL, and private sector Vedanta by the end of the first EoI cycle on November 15, 2017, sources said.
The blocks or areas that receive EoIs at the end of a cycle are put up for auction with the originator or the firm that originally selected the area getting a 5-mark advantage.
The 55 blocks have a total area of 59,282 sq km. This compares to about 1,02,000 sq km being under exploration currently, they said.
Blocks are awarded to the company which offers highest share of oil and gas to the government as well as commits to do maximum exploration work by way of shooting 2D and 3D seismic survey and drilling exploration wells.
Increased exploration will lead to more oil and gas production, helping the world's third largest oil importer to cut import dependence.
Import dependence has increased since 2015 when Modi had set the target. India currently imports 81 per cent of its oil needs.
The new policy replaced the old system of government carving out areas and bidding them out. It guarantees marketing and pricing freedom and moves away from production sharing model of previous rounds to a revenue-sharing model, where companies offering the maximum share of oil and gas to the government are awarded the block.
The government till now has been selecting and demarcating areas it feels can be offered for bidding in an exploration licensing round.
So far, 256 blocks had been offered for exploration and production since 2000. The last bid round happened in 2010. Of these, 254 blocks were awarded. But as many as 156 have already been relinquished due to poor prospect.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)