India’s first auction of oil and gas blocks under a new liberal licensing regime on Thursday is set to test investor appetite at a time when renewable sources of energy are threatening the dominance of fossil fuels.
The first auction of blocks identified by explorers under an open acreage licensing policy (OALP) ensures greater industry involvement in the auction design and is a departure from the earlier regime in which pre-determined blocks were auctioned. Investors are also eligible for liberal fiscal and contractual terms, including pricing and marketing freedom for natural gas, under a new hydrocarbon exploration licensing policy (HELP) announced in March 2016.
Thursday’s auction will signal the direction India’s exploration industry is headed for as oil fetches far less returns to investors now compared to 2011-12 when price averaged a high of $118 a barrel. Indian basket of crude touched $76.25 a barrel on Wednesday. Besides, the outlook for fossil fuels is uncertain given the rapid advances made by solar power industry which is making commercial diesel power generation sets redundant. Policy makers are also working on making the country transition to full electric mobility by 2030, which is forcing conventional energy firms like Indian Oil Corp. and NTPC Ltd to test waters in electric vehicles charging network. Read More…
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