New Delhi:
The state-owned Oil and Natural Gas Corporation (ONGC) has won 18 of the 21 territories offered for oil and gas exploration and production in the sixth round of bidding under the Open Acreage Licensing Policy, according to upstream regulator DGH.
Oil India Ltd (OIL) walked away with two blocks and Sun Petrochemicals Pvt Ltd got one block, the Directorate General of Hydrocarbons said when announcing the winners of the OALP-VI round.
The 21 blocks or areas tendered for the exploration and production of oil and gas in Open Area Licensing Policy (OALP) Bid Round-VI attracted only 3 bidders at the close of bidding on October 6, 2021.
Of the 21 blocks offered, 18 received a single bid and the remaining 3 blocks had two bidders.
ONGC, India’s largest oil producer, had bid for 19 blocks, while OIL had bid for two. ONGC was the only bidder in 16 blocks and OIL was the only bidder in the two areas it searched for.
Sun Petrochemicals is bidding on three blocks, where it competes with ONGC.
The combination of Vedanta Ltd and Reliance-BP, which had bid in previous OALP rounds, failed to bid in the current round.
The government hoped opening more acreage for exploration would boost India’s oil and gas production, cutting its $119 billion oil import bill.
In 2016, it enacted an open acreage policy that diverged from the government’s previous practice of identifying and bidding blocks to one where explorers were given the freedom to identify any area outside the area already owned by some company. , for oil and gas prospecting.
The areas identified should be clubbed and put up for bidding twice a year. The company that identifies the area gets a 5 point advantage.
But with the exception of the first round, private sector participation was low. Mining magnate Anil Agarwal’s Vedanta Ltd walked away with 41 blocks of the 55 blocks offered in the very first round and gained 10 more territories in two subsequent rounds.
Other rounds were dominated by state-owned companies.
In the OALP-VII round, which closed its bids in February this year, four companies, including three state-owned companies, made ten bids for the eight oil and gas blocks. Six blocks received single bids.
India is 85 percent dependent on imports to meet its oil needs and finding newer reserves through exploration rounds is key to reducing that dependency.
In the previous five OALP bidding rounds, 105 blocks have been bid for oil and gas exploration. Of these, Vedanta Ltd walked away with 51. OIL won 25 and ONGC another 24.
The joint venture of Reliance Industries and BP received one block. Indian Oil Corporation (IOC), GAIL, BRPL and HOEC also received a block each.
The 105 blocks covering approximately 156,580 square kilometers in more than 17 sedimentary basins of India attracted a total committed investment of approximately $2.378 billion in the exploration phase.
The 21 OALP-VI blocks are spread across 11 sedimentary basins, 9 states covering an area of 35,346 square kilometers. Of these, 15 blocks are on land, 4 in shallow water and two in ultra-deep water.
At the time of the launch of OALP-VI in August 2021, the government had said it expected a $300-400 million investment commitment in oil and gas exploration through the round.
Under OALP, blocks in Category I basins are awarded to a company that provides the majority of the revenues from produced oil and gas. Those in category II and III are outsourced to those who provide maximum exploration or investment commitments.
Category-I basins have created reserves and fields that are already producing while Category-II basins are the ones that have conditional resources awaiting commercial production. Category III basins are the ones that have potential resources waiting to be discovered.
In OALP-VI, 12 blocks are in Category I basins, 4 are in Category II and the remaining 5 are in Category III.
ONGC won 9 Category 1 basin blocks, OIL got two and Sun won one block, according to the list of winners prepared by the DGH.
Features of the OALP round include reduced royalty rates, no oil tax, a unified licensing system, freedom of marketing and pricing and a revenue-sharing model, DGH said.
Exploration rights will be offered in all retained territories for the full contract term, it said adding concessional royalties will apply in case of early commercial production.
There is no revenue sharing in blocks falling into Category II and III basins, except in the case of windfalls.