India set to hold third oil, gas block auction under new policy

By Debjit Chakraborty and Dhwani Pandya on 2/10/2019
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Kreuz Glorious vessel. Photo: ONGC.

NEW DELHI (Bloomberg) -- India announced a third round of auctions in a year for oil and gas blocks under a more liberal policy, targeting to raise as much as $700 million in exploration investments as the country seeks to cut its reliance on imports.

The South Asian nation is offering 23 oil and gas blocks, including 5 coal-bed methane areas, under the Open Acreage Licensing Program, according to an oil ministry statement on Sunday. Bidding for blocks in the latest auction will start from Monday and close on April 10. The blocks on offer cover about 32,000 km2 and include 10 onshore areas and one deep-water block.

"In our assessment, there is going to be a significant increase in energy demand over the next 20 years and oil and gas are likely to remain prominent fuels in the global energy basket," Oil Minister Dharmendra Pradhan said at the Petrotech-2019 conference in New Delhi, where the launch was announced.

The world’s fastest growing energy user imports more than 80% of its crude and needs investment to find new resources and boost output. In a bid to lure investments amid falling oil output, it shifted to the more liberal licensing policy, allowing investors the rare freedom of deciding the areas they want to drill. Before the first auction in January 2018, India also raised its potential hydrocarbon resources to about 42 Bmt  from the 28 Bmt estimated more than two decades ago, citing better data availability.

In the first round, which was shunned by international oil majors, India received investment commitment of about $840 million (60 billion rupees) in the 55 blocks auctioned. Of these, 41 blocks were won by Vedanta Ltd.’s Cairn division. The second round announced on Jan. 7 offered 14 blocks spread over about 30,000 km2.

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