India notifies largest tender for oil & gas exploration under open acreage programme

Dec 21,2021

As part of its ongoing efforts to boost energy security, India has announced its largest global tender for the auction of eight oil and gas blocks under the Hydrocarbon Exploration and Licensing Policy (HELP).

The blocks spread over six sedimentary basins cover an area of 15,766 square km. The five onland and three offshore blocks are located in Rajasthan, Tripura, Madhya Pradesh, Assam, and the western and eastern basins.

"In continuation of its aggressive programme for exploration and adhering to the prescribed timelines, the government has launched the Open Acreage Licensing Programme (OALP) Bid Round-VII for international competitive bidding," a statement from the Ministry of Petroleum & Natural Gas said on Tuesday.

As a critical part of HELP, the OALP mechanism allows potential investors in the sector to carve out hydrocarbon blocks of their choice by assessing exploration and production (E&P) data available at the National Data Repository (NDR) of the Directorate General of Hydrocarbons (DGH) upon submission of expression of interest (EoI).

This will be the seventh auction under OALP since 2018. After completion of the seventh round, the total area under the programme will increase to 207,692 sq. km.

Petroleum and Natural Gas Minister Hardeep Singh Puri in a tweet said, "In a significant step towards boosting India’s domestic oil & gas production, the biggest oil & gas tender in the history of the industry launched for 75 oil & gas blocks launched by @DghIndia. Covers DSFs, across 32 contract areas both onshore & offshore."

Welcoming the announcement, Vandana Hari, founder of global energy advisory Vanda Insights, said, "India should continue to remove all the stops for its producers, both in the state and private sector, to take on newer exploration areas."

The bids for the blocks can be submitted through a dedicated e-bidding portal, ebidding.dghindia.gov.in, till 12 pm on February 15, 2022. The government expects to complete the process of awarding these blocks towards the end of March.

This round is expected to generate an immediate investment of anywhere between $300-400 million.

Tough time to be looking for global investors

The announcement, however, comes amid the raging coronavirus pandemic and adoption of a stricter framework to stave-off climate change at the UN’s COP26 summit in October. Then there are also countries competing with India for investments in their E&P sector.

"It’s a tough time to be scouting for upstream investors, as international oil companies are beating a retreat under pressure from environmentalists. At the same time, there are countries with big basins like Brazil that are also vying for the upstream dollars,” Hari told BusinessToday.In.

However, she was quick to add that the world’s third-largest oil consumer’s persistence on upstream development also has a dual advantage.

"Firstly, as a growing import-dependent country, it ought to do everything it can to tap its oil and gas reserves. Secondly, the plunge in upstream investment globally, accelerated by Covid and stricter climate targets, will likely drive us to a precipice where oil and gas supply run short way before alternative energy sources are available. In such a scenario, India’s contribution would count for more even if it’s not sitting on massive reserves," observed Hari.

In FY 2020-21, India produced 30.5 MMT of crude, while it imported 198.1 MMT of the commodity worth $62.7 billion during the same period.

The blocks offered for auction incorporate investor-friendly HELP features like reduced royalty rates, no oil cess, a uniform licensing system, marketing and pricing freedom, provision for revenue sharing, exploration rights on all retained areas for the contract lifecycle and concessional royalty rates in case of early commercial production.