ONGC sweeps open acreage oil and gas block auctions
New Delhi: Mining moghul Anil Agarwal's Vedanta Ltd and state-owned ONGC were top bidders on Wednesday for 55 oil and gas blocks offered in India's maiden open acreage auction that was shunned by domestic private and international energy majors.
Vedanta bid for all the 55 blocks while ONGC bid for ?37 blocks either on its own or in consortium with other state-owned firms. State-owned Oil India Ltd (OIL) bid for 22 blocks in a similar fashion.
Vedanta was sole bidder for two blocks and had either ONGC or OIL as direct competitor in the remaining.
Except for the two blocks that received three bids each, all the other 53 had just two bidders.
Reliance Industries and its partner BP plc did not bid for a single area. Essar Oil and Russia's Rosneft-backed Nayara Energy also abstained from the round.
No foreign company participated in the auction, a first since India began offering oil and gas area for exploration and production through bids in 1999.
Oil Minister Dharmendra Pradhan had touted the maiden auction under the Open Acreage Licensing Polict (OALP) as game changer.
DGH said a total of 110 bids were received from a total of nine companies - five state-run and four private firms. Besides Vedanta's oil unit, Cairn India, other private players bidding included Selan Exploration, HOEC and Sun Petro.
Bidding in the auction of 55 exploration blocks on offer for prospecting of oil and gas under the OALP closed on Wednesday.
Sources said Cairn put in very aggressive bids for 13 blocks and a little less aggressive bids for another nine.
The remaining bids were mostly routine, they said.
DGH, the upstream technical arm of the ministry of petroleum and natural gas, began opening of offers received under the OALP bid round being held under the new Hydrocarbon Exploration and Licensing Policy (HELP).
India had in July last year allowed companies to carve out blocks of their choice with a view to bringing about 2.8 million sq km of unexplored area in the country under exploration.
Under this policy, companies are allowed to put in an expression of interest (EoI) 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 anytime of the year but their are accumulated twice annually.
As many as 55 blocks were sought for prospecting of oil and gas by prospective bidders, mostly by state-owned explorers, Oil and Natural Gas Corp (ONGC) and OIL, and private sector Cairn India by the end of the first EoI cycle on November 15, 2017, they said.
The blocks or areas that receive EoIs at the end of a cycle are put up for auction with the originator or the firm that originally selected the area getting a 5-mark advantage.
The 55 blocks have a total area of 59,282 sq km. This compares to about 1,02,000 sq km being under exploration currently, they said.
Blocks would be awarded to the company which offers 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.
Increased exploration would lead to more oil and gas production, helping the world's third largest oil importer to cut import dependence.
Prime Minister Narendra Modi has set a target of cutting oil import bill by 10 per cent to 67 per cent by 2022 and to half by 2030.
Import dependence has increased since 2015 when Modi had set the target. India currently imports 81 per cent of its oil needs.
Sources said ONGC and Cairn India had put in 41 out of 57 bids received in November last year. Private player Hindustan Oil Exploration Co (HOEC) bid for one area in a round.
Of the 57 EOIs put up, only 55 blocks were cleared for bidding after eliminating areas that are under no-go zone or overlapping with existing mining lease.
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 maximum share of oil and gas to government are awarded the block.
The government till now 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. Of these, 254 blocks were awarded. But as many as 156 have already been relinquished due to poor prospectivity.