A key initiative of the Narendra Modi-led administration to cut India’s oil import bill met with a lackluster response from international private firms today.
Overseas oil explorers did not even make a single bid in the first round of bidding for the Open Acreage Licensing Programme that ended on Wednesday. Among other objectives, it seeks to open up India’s oil and gas sector to attract more investors and boost production.
India, which imports nearly 80 percent of the oil it consumes, aims to cut the crude import bill by 10 percent by 2022 by boosting local production. That’s because high international crude prices widen India’s trade and current account deficits and also fuel inflation.
The open acreage auctions are based on the Hydrocarbon Exploration Licensing Policy – a liberal contractual and fiscal model for the award of hydrocarbon acreages or areas under exploration. As many as 55 exploration blocks (46 on-land, 8 offshore, 1 deep-water) in prospective basins, spanning an area of over 60,000 sq km, were on offer.
Nine Indian companies — 4 private and 5 state-run — submitted 110 bids in the first round of the online auction. Vedanta Ltd. led with 55 bids followed by Oil and Natural Gas Corporation at 37. As many as 18 bids were received from Oil India Ltd. and six from GAIL Ltd.
Among the bids received, 92 were for on-land blocks and 18 for offshore blocks. The bidding began on Jan. 19 and the blocks will be awarded in June.
The Open Acreage Licensing Programme allows companies to carve out their own blocks. It replaced the 1997 New Exploration and Licensing Policy where the government used to choose hydrocarbon blocks.
The new policy also offers a single licence for exploration and production of all forms of hydrocarbons, including shale.
Moreover, it provides for a simplified revenue-sharing model along with marketing and pricing freedom. The older NELP model had a profit-sharing structure, allowing companies to first recover their capital and operating expenditure before sharing the profits with the government.
The new blocks on offer included Assam-Arakan (19), Mumbai offshore (2), Cambay (11), Rajasthan (9), Krishna-Godavari (5), Cauvery (3), Kutch (2), Saurashtra (2), Himalayan foreland (1) and the Ganga basin (1).