Oil India, Vedanta, ONGC Sign Contracts For Oil Blocks They Won In Auction
An oil rig. (Photographer: Daniel Acker/Bloomberg News)

Oil India, Vedanta, ONGC Sign Contracts For Oil Blocks They Won In Auction

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State-owned Oil and Natural Gas Corporation Ltd. and Oil India Ltd alongside private sector Vedanta Ltd. walked away with almost all the oil blocks auctioned in the latest licensing round as part of the government’s effort to raise domestic production.

The winners of Open Acreage Licensing Policy Round II and III, which closed earlier this year, signed exploration and production contracts with the government at a function on Tuesday.

Speaking on the occasion, Oil Minister Dharmendra Pradhan said more production of oil and gas is priority of Modi 2.0 government as it looks to meet its rising energy demand of fast growing economy.

“There is possibility of $1 billion in OALP-II and III,” he said.

Oil India Ltd. signed up for 12 out of 32 oil and gas exploration blocks it won in the twin rounds that ran parallel because OALP-II was delayed. Vedanta Ltd. walked away with 10, while ONGC got eight blocks.

Reliance Industries and its British partner BP Plc signed a contract for the sole KG basin gas they had bid, while Indian Oil Corporation Ltd., too, got one block.

Reliance-BP combine outbid ONGC in one Krishna Godavari basin block in the Bay of Bengal. This is an area that ONGC had previously relinquished and is said to hold natural gas prospects.

Also read: Oil India Wins 12 Blocks In Oilfield Exploration Auction

According to the Directorate General of Hydrocarbons, Oil India won six out of 14 blocks on offer in OALP-II, while Vedanta walked away with five. ONGC, Reliance-BP and IOC won one block each.

In OALP-III, ONGC won seven blocks while OIL got six and Vedanta bagged the remaining five.

Bidding for 14 blocks on offer in the OALP round-II and another 18 oil and gas blocks as well as five coal-bed methane blocks on offer in OALP-III closed on May 15. No bid was received for any of the CBM blocks.

Reliance-BP had made their first bid in eight years when they sought an area that previously was held by ONGC, sources said.

When the government in July 2017 allowed companies to carve out blocks of their choice with a view to bringing about 2.8 million square kilometres of unexplored area in the country under exploration, Reliance-BP sought the KG area containing the discoveries.

Under the new policy, areas sought by any company are put on auction with the initiator or the company that originally carved out the block, getting a five-point advantage.

 BP Plc Chief Executive Officer Bob Dudley and Reliance Industries Limited Chairman Mukesh Ambani at a press conference in New Delhi. (Photo: PTI)
BP Plc Chief Executive Officer Bob Dudley and Reliance Industries Limited Chairman Mukesh Ambani at a press conference in New Delhi. (Photo: PTI)

Also read: Reliance Industries Reclaims Tag Of India’s Most Valued Firm By Market Value

Reliance-BP had last jointly bid for a KG deepwater block in the eighth bid round under previous licensing policy in 2008. They, however, gave up the block after not finding any commercially exploitable oil and gas reserves.

In the following year, Mukesh Ambani-owned Reliance on its own bid for six blocks in the ninth round of New Exploration Licensing Policy but did not win any block.

Sources said at the close of bidding for the current round on May 15, ONGC had put in bids for 20 out of the 32 blocks on offer, while OIL made bids for 16 blocks.

Vedanta, which had walked away with 41 out of the 55 blocks offered in OALP-I last year, bid for 30 areas.

IOC, GAIL (India) and SunPetro bid for two blocks each, they said.

Also read: GAIL Plans Listing Gas Unit, Spending Rs 54,000 Crore In 2-3 Years

BP had more than a decade back entered the country, buying 30 percent stake in Reliance's 21 oil and gas exploration blocks for $7.2 billion. All but a couple of blocks have since been relinquished.

NELP has since been replaced by Hydrocarbon Exploration Licensing Policy under which OALP bids round have been held.

Under the new policy, called open acreage licensing policy, companies are allowed to put in an expression of interest for prospecting of oil and gas in any area that is presently not under any production or exploration licence.

The EoIs can be put in at any time of the year but they are accumulated twice annually.

The blocks or areas that receive EoIs at the end of a cycle are put up for auction.

The two windows of accumulating EoIs end on May 15 and Nov. 15 every year. EoIs accumulated till May 15 are supposed to be put on auction by June 30 and those in the second window by Dec. 31.

Also read: Budget 2019: This Is How The Government Plans To Draw In More Foreign Investment

But, a delay in the offering of blocks meant that OALP-II and OALP-III ran concurrently. In OALP-1, Vedanta walked away with 41 out of 55 blocks bid out. Oil India won nine blocks while ONGC managed to win just two.

Blocks are awarded to the company which offers the 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.

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.

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