(Bloomberg) -- India will offer larger areas with higher oil and natural gas reserves in the next auction of discovered fields later this year as Prime Minister Narendra Modi’s government seeks to curtail rising crude oil imports.
“The next round would be meatier, bigger and players can expect even better fields,” Atanu Chakraborty, head of oil regulator Directorate General of Hydrocarbons, said in an interview. “The reserves are twice of that we offered in the first auction round, on a very conservative estimate.”
India last year offered 67 small oil and gas fields holding about 625 million barrels of reserves in its first auction in six years allowing new entrants such as drugmakers and engineering companies to try their hand at boosting local production. The government also relaxed rules by allowing pricing freedom for oil and gas and a uniform policy for extraction of all hydrocarbons under a single license to encourage investments.
“We want to create a lot of E&P companies in India,” Chakraborty said in an interview in London last week. “One mustn’t forget Cairn was created out of India and we want more of them.”
Cairn Oil & Gas, now a unit of billionaire Anil Agarwal’s Vedanta Ltd., is producing more than a quarter of India’s crude oil output through the six blocks it operates in India, according to its website.
Modi, who is targeting a 10 percent cut in oil imports by 2022, has a lot of work ahead. A burgeoning appetite for energy has increased India’s import dependence to 82 percent last year from 76 percent five years ago. The International Energy Agency estimates India will be the fastest-growing oil consumer through 2040.
The government is pushing for higher local production and greater use of natural gas and alternative fuels to reduce the strain on its finances and achieve greater energy security. The South Asian nation’s oil imports are estimated to touch $85 billion in the year to March 2018, according to India’s oil ministry.
India is also seeking to tap unlocked reserves by extending exploration to cover its entire sedimentary area of about 3.14 million square kilometers (1.2 million square miles), less than half of which has been appraised so far.
Modi’s cabinet on Tuesday approved spending more than 29 billion rupees ($452 million) for appraising new areas with limited data. The Directorate General of Hydrocarbons has created a data bank of the nation’s sedimentary basins and has launched an open-acreage licensing program, that gives explorers the freedom to carve out areas for exploration.
“People have made their expressions of interest to work in about 50,000 square kilometers,” according to DGH’s Chakraborty. “This is unprecedented interest. The area would go out for bidding in November.”
About 100 companies, including some international oil explorers, have purchased data for the Indian sedimentary basins. The country is targeting completing the bidding by March, he said.
“Indian market is a major attraction for those who are buying the data,” Chakraborty said. “In India, the demand risk is zero, the revenue risk is zero -- who won’t want to be right in the middle of such a market?”