Govt unveils largest auction of oil & gas blocks

The Government launched the biggest auction of oil & gas exploration blocks even as global energy producers cut investments in the face of falling prices and the worst economic slump since the World War II. The Centre is offering 70 areas for exploration of oil and natural gas, Petroleum Secretary R.S. Pandey said in New Delhi. These include 24 deep-water blocks, 28 shallow-water blocks and 18 onland blocks. The Petroleum Ministry has also offered 10 coal-bed methane (CBM) blocks for exploration in the fourth round of offering such blocks, Pandey said. Bids for the 70 fields would close on Aug. 10, he said. The auction this year will be held in two phases, with the second part to be scheduled after the Government assesses the response to the first, Pandey said. Thereafter, the Government will evaluate the bids, make awards, finalize and sign the contracts under CBM-IV and Production Sharing Contracts under NELP-VIII within 4 months.

The Government has so far awarded 212 oil and gas blocks, under its New Exploration Licensing Policy (NELP) introduced in 1999. About US$10bn has been invested in exploration from 1999 onward until Dec. 31, Pandey said. Asia's third-largest energy consumer, attracted bids for 45 of the 57 areas offered in the previous auction last year, when crude climbed to a record. After seven rounds of NELP, the area under exploration has increased more than four times to 48% of Indian Sedimentary Basin area from 11% before implementation of NELP. Under three rounds of CBM, contracts for 23 CBM exploration blocks have been signed. More than 6 Trillion Cubic Feet (TCF) reserves have already been established in 4 CBM blocks.

Worldwide spending on oil and gas exploration may drop 12% in 2009 to US$400bn, Barclays Capital said. But, the Centre is hoping that global energy producers will be encouraged by the start of production this month from the biggest gas field operated by Reliance Industries Ltd. That will boost interest in the auction, Pandey said on April 2. Promotional road shows for NELP-VIII and CBM-IV have been planned at Mumbai (20th April), Perth (27-28th April), Brisbane (29th April), London (4 -5th May), Houston (7-8th May) and Calgary (14-15th May), and Investors’ Meet at Washington (11-12th May).