India launches first auction of exploration blocks under new licensing policy
ET Bureau|
Jan 18, 2018, 07.01 PM IST
India has launched the first auction of exploration blocks under its new licensing policy and sought bids for 55 blocks spread across the country.
This is the first auction in eight years of exploration blocks in the country, which has tweaked its licensing policy several times in the past without brilliantly raising its crude oil and gas output. It imports 82% of its oil requirement today and aims to bring that down to 67% by 2022.
The new licensing policy aims to raise local output by replacing many previous rules that only incrementally boosted output but caused several legal disputes between the government and the industry.
"We are not a glorious geology and despite that bidders have submitted Expression of Interest (EOI) for 59,000 sqkm," Oil Minister Dharmendra Pradhan said after launching the auction. He was referring to the country's not-so-attractive hydrocarbon reserves.
The recently framed licensing policy allows companies to submit EoIs round the year which are bunched for evaluation twice a year every six months. Six Indian companies have submitted bids for 55 blocks, covering 59,000 sqkm, which are now being opened to bids by others.
"We are very optimistic," Pradhan said about the possible investor participation in the auction. "For the first time, bidders have been able to carve their own blocks. The acreage isn't being forced upon them by the government, as was the case earlier," Pradhan said, referring to the advantages of the new policy, which allows bidders to decide the perimeter of their blocks.
The new policy offers single license for all forms of hydrocarbons in a block, gives companies the freedom to market and price oil and gas, and operates with a revenue-sharing model, which potentially reduces scope of bureaucratic micro-management of oil contracts.
The level of investor interest in the auction will be a commentary on the new licensing policy, India's hydrocarbon-richness, and the global view on future of oil business.
Nearly two-thirds of EOIs have been received for onshore blocks, a quarter of applications for shallow fields and the balance for deep water fields.
The bids will be evaluated on two parameters of minimum work programme and revenue share offered by the participants- both criteria will have equal weightage of 50 marks each. The company that has submitted EOI will get 5 bonus marks for that block under the criteria of minimum work programme, which comprises the amount of seismic surveys and drilling of wells that a bidder promises to undertake.
All bids will be evaluated, and winners announced by May.
This is the first auction in eight years of exploration blocks in the country, which has tweaked its licensing policy several times in the past without brilliantly raising its crude oil and gas output. It imports 82% of its oil requirement today and aims to bring that down to 67% by 2022.
The new licensing policy aims to raise local output by replacing many previous rules that only incrementally boosted output but caused several legal disputes between the government and the industry.
"We are not a glorious geology and despite that bidders have submitted Expression of Interest (EOI) for 59,000 sqkm," Oil Minister Dharmendra Pradhan said after launching the auction. He was referring to the country's not-so-attractive hydrocarbon reserves.
The recently framed licensing policy allows companies to submit EoIs round the year which are bunched for evaluation twice a year every six months. Six Indian companies have submitted bids for 55 blocks, covering 59,000 sqkm, which are now being opened to bids by others.
"We are very optimistic," Pradhan said about the possible investor participation in the auction. "For the first time, bidders have been able to carve their own blocks. The acreage isn't being forced upon them by the government, as was the case earlier," Pradhan said, referring to the advantages of the new policy, which allows bidders to decide the perimeter of their blocks.
The new policy offers single license for all forms of hydrocarbons in a block, gives companies the freedom to market and price oil and gas, and operates with a revenue-sharing model, which potentially reduces scope of bureaucratic micro-management of oil contracts.
The level of investor interest in the auction will be a commentary on the new licensing policy, India's hydrocarbon-richness, and the global view on future of oil business.
Nearly two-thirds of EOIs have been received for onshore blocks, a quarter of applications for shallow fields and the balance for deep water fields.
The bids will be evaluated on two parameters of minimum work programme and revenue share offered by the participants- both criteria will have equal weightage of 50 marks each. The company that has submitted EOI will get 5 bonus marks for that block under the criteria of minimum work programme, which comprises the amount of seismic surveys and drilling of wells that a bidder promises to undertake.
All bids will be evaluated, and winners announced by May.
