Business Standard | Govt offers 42 hydrocarbon blocks for exploration and development

Oct 11,2022

The government has put up as many as 42 oil and gas blocks for exploration and development through international competitive bidding.

According to announcements made by upstream regulator Directorate General of Hydrocarbons (DGH), this includes 26 oil and gas blocks offered under the Open Acre Licensing Policy (OALP), along with 16 blocks for prospecting for coal-bed methane.

The government has not given a timeline for the bidding for the 26 oil and gas blocks. These cover an area of approximately 223,000 square kilometers (sq. km), constituting one of the largest such offerings in recent times. Of the 26 blocks, 18 were carved out by the government and eight have been notified as a result of expressions of interest (EoIs) received from potential investors.

Meanwhile, Union Petroleum and Natural Gas Minister Hardeep Singh Puri on Monday launched the offshore bid round offering and assured transparency, efficiency, and ease of doing business to investors. In a keynote address to industry leaders in Houston, the minister described the initiatives taken by his ministry in accelerating the exploration and production activities in India.

Of the 26 blocks, 15 are in ultra-deepwater, eight are in shallow water, and three are on land. Consequently, the ultra-deepwater blocks cover an area of 159,000 sq. km, while the on land blocks cover an area of 3,666 sq. km.

The government launched the OALP mechanism to allow investors the chance to carve out blocks of their choice by assessing the exploration and production data available in the national data repository and by submitting an expression of interest. The EoIs can be submitted throughout the year without waiting for a formal bid round to start.

The previous round of bids for oil and gas blocks (OALP bid round-VIII) was launched in July for 10 blocks. In September, the government had signed 34 oil exploration contracts with 14 companies. This included 30 contracts for discovered oil fields (DSF) blocks.

Officials said the latest announcement reiterated the government’s aim to expedite the process of exploration for hydrocarbons.

India aims to have 1 million sq. km of area under crude and natural gas exploration by 2030. The move has come at a time when the Ukraine crisis has again laid bare the fragile state of energy supply chains globally.

The current area under exploration has doubled during the past five years to 207,692 (0.2 million) sq. km as of earlier this year. India currently relies on imports to meet 85 per cent of its oil needs and 50 per cent of the natural gas requirement, as domestic production is inadequate.

The bidders for the latest round are also expected to encounter easier oil and gas exploration norms, which are being prioritised to quickly harness domestic production capabilities as demand outstrips supply by a wide margin. BP Energy outlook has projected that by 2050, India's share in the global energy demand will rise to 12 per cent from six per cent currently. As of 2021, the country accounted for just 0.7 per cent of global oil and gas production.

Coal-bed methane
The 16 blocks offered for prospecting coal-bed methane come with a key advantage for smaller and new players. Prior experience in the oil and gas sector is not mandatory for submitting bids for these, the DGH said. All the blocks also come with an assurance from the government that no revenue needs be shared until there is a windfall gain, it added.

For administrative ease, each block has been carved out in a way that they fall within one state only. They will be run through a single licence for conventional and unconventional hydrocarbons, will have full marketing and pricing freedom for the gas produced, and will allow exploration during the entire contract period.

The blocks do not overlap coal-bed methane blocks with existing, proposed coal blocks mines and have existing gas pipeline infrastructure around the area. The government has also announced full participation from foreign companies and joint ventures.