DGH gets 51 oil & gas exploration bids in first auction under OAL

India in July opened 2.8 million sq km of sedimentary basins for oil and gas exploration in a bid to raise domestic production and cut excessive dependence on imports.

The Open Acreage Licensing (OAL), which allows companies to select blocks or areas after studying seismic data to explore and produce oil and gas, "is witnessing an encouraging response from the industry," the DGH said.

OAL replaces the old system of government carving out areas and bidding them out. OAL allows investors to carve out their own areas and put in an expression of interest (EoI).

Once an EoI is received for an area, it is put on competitive bidding and any company offering the government maximum share of oil and gas is awarded the block.

"So far 51 expression of interests (EOIs) have been received covering an area of approx 60,000 sq km," the Directorate General of Hydrocarbons (DGH) said in a post announcing a roadshow for OAL in Mumbai later this week.

Oil Minister Dharmendra Pradhan will lead the roadshow on October 26, which will "serve as a platform for discussion on the new policy reforms in the sector," it said.

He will also interact with heads of exploration and production (E&P) companies, oil and gas service providers, financial institutions and private equity firms to "take a holistic view of financial and allied community on the sector," DGH said.

Last date for submission of EoI in the first cycle of bidding under OAL is November 15 and winners would be announced by January 1. OAL is being offered under the Hydrocarbon Exploration and Licensing Policy (HELP) that provides revenue sharing model for bidding for oil and gas blocks. It promises marketing and pricing freedom for oil and gas produced.

Under OAL, companies can carve out any area that is currently not under any licensee, and evince interest for doing exploration and production.

Once an area is selected, the government will put it up for bidding and any firm offering the maximum share of oil or gas produced from the area would be awarded the block.

Till now, the government has been selecting and demarcating areas it feels can be offered for bidding in an exploration licensing round. So far 256 blocks had been offered for exploration and production since 2000. The last bid round happened in 2010.

Singapore: India is an attractive market for Liquefied Natural Gas (LNG) spot trade though its power generating sector will continue to rely significantly on coal, energy industry executives said here on Monday.

"The LNG market is getting shorter, more liquid and transparent that suits market like India as there are going to be more LNG available on the spot (trade), said Martin Houston, vice chairman of the Texas-based LNG company Tellurian Inc.

"With the increasing number of terminals along the coasts and pipeline connection, I see great amount of LNG being sold to India (in the coming years), he told a press conference at the Singapore International Energy Week which opened on Monday.

But India will also have to maintain some long-term LNG supply contracts for stability, added Keisuke Sadamori, director at the Directorate of Energy Markets and Security in the International Energy Agency.

He noted that India has joined Japan, South Korea and China in calls for global LNG suppliers to offer competitive prices.

Houston noted that India is renegotiating long-term contract for lower LNG prices as price will remain a determinant in lowering energy cost in India.

"There has been willing buyers and willing sellers and gas continued to be supplied to India despite the re- negotiation of termed contracts," he said.

However, coal will continue to play a significant role in India s power generating sector as the government continues with its efforts to reach out with electricity across the country, both executives and delegates at the conference pointed out.

Emphasising on India's ongoing renewable energy programme, the executives saw the significance of coal as it would remain the cheapest fuel for generating electricity.

India is going to be dependent on coal for a long-time, said clean energy consultant Ken Hickson, managing director of Singapore-based ABC Carbon.

Though Indian renewable energy targets are applaudable, some 275 GW by 2027, according to National Electricity Plan 3, Hickson noted that the progress on some of the green projects have been slow.

India has vast renewable energy resources, hydro-power, solar and wind being among the main sources, according to Hickson.