India’s upstream petroleum regulator Directorate General of Hydrocarbons (DGH) has received as many as 45 Expressions of Interest (EoI) in a little over a month for various fields to be bid out under the mega oil and gas auctions in what analysts called an “encouraging response”.
The oil ministry had made the auction live on 1 July, offering over 85 percent of the country’s 3.14 million square kilometres of hydrocarbon sedimentary area under a new bidding mechanism – Open Acreage Licensing Policy (OALP) — and a revamped Hydrocarbon Exploration Licensing Policy (HELP).
“One can call this success if we take into account the number of EOIs submitted in a month’s time. It may be too early to reveal anything else on this matter, though,” a senior DGH official told ETEnergyWorld. He declined to comment on the areas for which EOI have been submitted and players which have applied for the blocks, citing confidentiality.
Oil minister Dharmendra Pradhan had in June said the problems faced by investors under the previous oil and gas exploration policy had prompted the government to completely revamp the policy and announce a new bidding mechanism. The government aims at awarding fields under the new regime by December this year.
“The initial response seems encouraging as it has only been a month. However, we will have to wait for the whole process to unfold and see how many fields are actually awarded,” said K Ravichandran, Senior Vice President at research and ratings agency ICRA.
Another oil sector expert, Deepak Mahurkar, Partner at accounting and consultancy firm PwC, said 45 EOIs received in around a month of opening demonstrate that India’s OALP has met investor expectations. “More blocks will be offered for bidding than were awarded in New Exploration and Licensing Policy (NELP)-VIII and NELP-IX put together. We hope PSUs, Indian private and MNCs have all expressed interest,” he told ETEnergyWorld.
According to the DGH website, the 45 EOIs submitted are still under process.
The new OALP bidding mechanism under HELP allows investors to bid for oil and gas fields throughout the year. The current auction under HELP follows the just-concluded Discovered Small Fields (DSF) bidding rounds under which 31 blocks were awarded to around two dozen mostly small-sized firms.
The new bidding mechanism allows an investor to submit an EOI for undertaking work under Petroleum Operations Contract (POC) or Reconnaissance Contract (RC). The investor will have the liberty to apply for such contracts bi-annually (1 July-31 December and 1 Jan-30 June) and may also participate in rounds of auctions conducted by the regulator DGH over and above the applications made under OALP.
The new hydrocarbon licensing policy has provisions aimed at easing E&P norms including single license for exploration and production of conventional as well as non-conventional hydrocarbon resources, option to select blocks without waiting for formal bid rounds, revenue sharing model with no micro-management by the government, as opposed to profit-sharing model under the previous policy, and pricing and marketing freedom. Read more