The bidding will take place in two phases for the first time.
The Directorate General of Hydrocarbons (DGH) today said the eighth round of auction of oil and gas blocks under the New Exploration and Licensing Policy (Nelp) would take place on April 9.
However, for the first time, the bidding may take place in two phases. While the first phase, to be held this month, would have 70 oil and gas blocks on offer, the second phase, which could be held in November 2009, would have around 80 blocks on offer.
“We are offering 70 exploration blocks at present. We may offer another 80 blocks around November this year, when we would have more clarity on the other potential blocks,” said Director General of Hydrocarbons VK Sibal.
While the DGH is optimistic that companies will bid aggressively, industry experts believe that unlike last round, this round could keep mid-level players from other sectors out of the bidding process.
“Unlike last year where companies from sectors like realty and media also participated, this year may keep them away. Besides, other parts of the globe are also offering lucrative deals and blocks where players are keen to sell out. This would be an added challenge for bidding for these blocks,” said an expert from a professional services firm.
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“Impact of the liquidity crunch coupled with softness of crude prices will affect the bidding process. However, serious players would still look forwarding to bidding,” he added.
International crude oil prices have fallen sharply from a high of $147 a barrel to about $50 at present. Industry experts say even international heavyweights like Royal Dutch Shell, Exxon Mobil and Conoco Phillips have revisited their growth plans and pulled down their E&P budget.
While the bidding for Nelp VIII has been announced, doubts over sub section 80-IB (9) of the Income Tax Act remain.
“I think clarity on the taxation issues would be given before we begin the bidding process,” said Sibal.
Last year, the government had, through the Finance Bill and an accompanying memorandum tabled in the Lok Sabha, proposed a new clause in sub-section 80-IB (9) that took away “petroleum and natural gas” from the definition of “mineral oil”.
According to industry players, this move leaves nothing in the category of mineral oil as there is no other oil that is commercially produced from minerals, except crude oil that has been referred to as petroleum.
Since 1997, when the government launched Nelp, it has awarded 206 blocks. Out of these, 68 discoveries of oil and gas have been made in 19 blocks, establishing reserves of 500 million tonnes of oil and oil-equivalent gas.
The committed investment on exploration is envisaged at $8.3 billion, out of which about $4.5 billion has already been incurred on exploration and about $1.5 billion on development of discoveries.
India, which is among the world’s fastest growing economies, still imports nearly 75 per cent of its annual oil requirement.