India seeks bids for oil, gas fields in first auction since 2010
[MUMBAI] India is putting up for auction nearly four dozen small oil and gas fields in the first such sale in six years, the country's oil ministry said in a newspaper advertisement on Tuesday.
A successful auction of the small oil and gas fields is seen as crucial to a recently announced hydrocarbon policy, which India hopes will unlock energy resources worth US$40 billion by simplifying rules and offering pricing incentives.
The world's fourth-biggest oil and gas consumer imports nearly three-quarters of its energy requirements, but Prime Minister Narendra Modi has set a target of cutting its fuel import dependency to two-thirds by 2022 and to half by 2030.
India is auctioning a total of 46 oil and gas fields, the oil ministry said, with 26 on land, 18 offshore in shallow water and two in deep water.
The deadline for submitting the bids is on Oct 31, with companies free to try for more than one exploration block.
The mostly small, marginal discoveries on offer were originally controlled by two state-owned exploration companies, Oil and Natural Gas Corporation and Oil India Ltd. The fields have remained undeveloped for years due to their small size and the high cost of development.
The current low crude oil prices - now around US$48 a barrel - will also likely make it hard for the government to attract bids for the fields.
Some exploration consultants have also criticised the revenue-sharing model being used by India as most countries auction oil and gas blocks based on a cost-recovery model.
In a revenue-sharing model a company operating an oil and gas field has to share revenue from any sales with the government from first production. In a cost-recovery model a company starts sharing income with the government only once its exploration and development costs have been covered.
REUTERS
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Energy & Commodities
Anglo rejects BHP takeover bid as significantly undervalued
India rice prices at three-month low on shrinking demand
Gold prices set for weekly decline ahead of US inflation data
Pricey coffee is here to stay as hoarding, heat hit Vietnam supply
Oil settles higher as weak US economic growth offset by supply concerns
India's Vedanta misses Q4 profit estimates on lower prices