India offers eight oil and gas blocks for bidding in latest round

India has offered 8 oil and gas blocks, mostly in Assam, for bidding in the latest bid round with a view to bringing more area under exploration, leading to increase in domestic production and reduction of imports.

Eight blocks have been offered in the seventh bid round of Open Acreage Licensing Policy (OALP), with bids due on February 15, 2022, the Directorate General of Hydrocarbons (DGH) said.

The "8 Blocks spread over 6 Sedimentary Basins, 5 States covering 15,766 square kilometers of area. Out of 8 Blocks, 5 Blocks are Onland type, 2 Blocks are Shallow Water-type and 1 Block is Ultra Deep-Water type," DGH said in the notice inviting offers.

Three out of the five onland blocks are in Assam Arakan or Assam Shelf while one is in Rajasthan. One block in the Satpura basin has also been offered. Two shallow water blocks are in Cambay off the Gujarat coast while one ultra-deepwater block in the Cauvery basin is also on offer.

The last bid round, OALP-VI, attracted just three bidders, two of whom were state-owned explorers Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL). 21 blocks or areas were offered for exploration and production of oil and gas in the OALP Bid Round-VI, for which bidding closed on October 6.

Besides ONGC and OIL, Sun Petrochemicals was the only other company to have bid, according to 'Summary of Bids' posted by DGH.

Of the 21 blocks on offer, 18 got a single bid and the remaining 3 blocks had two bidders. ONGC, India's largest oil producer, was the sole bidder for 16 blocks.

The government has been hoping that opening up of more acreage for exploration will help boost India's oil and gas production, helping cut down the USD 90 billion oil import bill.

In 2016, it brought in an open acreage policy which moved away from the previous practice of government identifying and bidding out blocks to one where explorers were allowed the freedom to identify any area outside of the ones that are already with some company or other, for prospecting of oil and gas.

The areas identified are to be clubbed twice a year and offered for bidding. The firm identifying the area gets a 5 point advantage.

But except for the first round, private sector participation has been scant. Mining mogul Anil Agarwal's Vedanta Ltd walked away with 41 blocks out of the 55 blocks on offer in the very first round and got another 10 areas in two subsequent rounds.

Other rounds have been dominated by state-owned firms.

India is 85 per cent dependent on imports to meet its oil needs and finding newer reserves through exploration rounds is key to cutting that reliance.

In the first five OALP bid rounds, 105 blocks for exploration of oil and gas were bid for. Of these, Vedanta walked away with 51. OIL won 25 and ONGC another 24.

The joint venture of Reliance Industries and BP got one block. Indian Oil Corporation (IOC), GAIL, BRPL and HOEC too got one block each.

The 105 blocks spanning an area of around 156,580 square kilometers in over 17 Sedimentary Basins of India attracted a total committed investment of USD 2.378 billion in the exploration phase.

Features of the OALP round include reduced royalty rates, no oil cess, uniform licensing system, marketing and pricing freedom and revenue-sharing model, according to DGH.

Exploration rights are offered on all retained areas for full contract life, it said adding concessional royalty rates apply in case of early commercial production.

There is no revenue sharing in blocks falling in Category II and III Basins except in the case of windfall gains.