Lukewarm Response to Oil Block Auction in India

123jump.com Staff
12 Oct, 2009
New York City

India received lukewarm response to its latest round oil exploration block auction as world financial crisis limit access to funding. Of the 70 blocks offered, 36 blocks received 76 bids. In the previous seven rounds of auction India attracted $10 billion in exploration investment.

[R]6:00 PM Mumbai, 8:30 AM New York – India received lukewarm response to its latest round oil exploration block auction as world financial crisis limit access to funding. Of the 70 blocks offered, 36 blocks received 76 bids. In the previous seven rounds of auction India attracted $10 billion in exploration investment.[/R]

India attracted at four international companies to explore and operate oil fields.

In the eighth round of oil exploration licenses and fourth round of coal-to-methane exploration selection, India opened up deepwater oil fields that expanded to four times its sedimentary basins to 48% of viable region.

The auction attracted a total of 45 companies of which seven were international companies according to a review with journalists by joint secretary D.N. Narasimha Raju.

BHP Billiton Ltd was selected to operate three offshore areas that are likely to produce oil and natural gas according to a joint secretary in the oil ministry of India.

Though the current auction attracted fewer than expected bids the block exploration policy has attracted $10 billion in investments since 1999. In the last ten years the established reserves have increased to 600 million tons of oil equivalent and 6 trillion cubic feet of natural gas.

In the years after seven rounds of auction, 68 oil and natural fields have been discovered in 19 exploration blocks and 59 companies are operating in 10 commercial basins.

The current round of auction started in April 2009 offered 70 exploration blocks of 24 deep water blocks, 28 shallow water blocks and 18 land blocks. These blocks are located in Gujarat, Assam, Manipur, Madhya Pradesh and West Bengal states.

The oil ministry lowered the bank guarantee to 7.5% from 35% in the previous auction considering the current weakness in the global financial markets and offered uniform exploration period of seven years.

India received offers for 36 of the 70 offered exploration area and Reliance Industries is seeking to develop one coal bed methane project and one offshore block.

In the latest block exploration India reinstated the seven year tax holiday provision for oil and natural gas exploration.

Of the 24 offshore blocks, India received eight bids, of the shallow water blocks, it received 13 bids. Small ten land blocks received 37 bids and five larger blocks received 10 bids according to the ministry of oil.

As expected Essar Oil was one of the most aggressive bidder for the blocks with eight bids for CBM blocks. The state controlled Oil & Natural Gas Corp bid for one block in partnership with Jindal Petroleum and Neyvelli Lignite. Arrow Energy of Australia bid for two blocks.