India Gets 74 Bids for New Oil, Gas Blocks
India received 74 bids for 33 oil and gas exploration blocks on Monday, but the latest licensing round aimed at attracting increased private investment failed to draw big global firms needed to boost the sector.
India is wooing private capital for exploration and encouraging local firms to buy stakes in foreign oil and gas projects to meet its surging energy needs. Asia's third-largest economy imports over 70 % of its crude and is keen to tap quickly domestic reservoirs.
But India's government is struggling with growing corruption and regulatory uncertainties which have threatened to taint the country's attractiveness as a destination for foreign firms.
Oil Minister S. Jaipal Reddy called the response to the auction as "more than satisfactory" and "very encouraging".
But Monday's auction failed to attract new bidders among major global energy firms, drawing interest from international companies which already operate in India such as BG, BHP Billiton and Cairn Energy.
India is competing with big oil producing countries as far apart as Latin America, Africa and Russia for exploration interest.
BP, which has just bought a 30 percent stake in 23 Indian blocks owned by Reliance, did not put in a bid.
Oil Secretary S. Sundareshan told reporters that contracts for the new blocks could be signed withtin three months. A total of 34 blocks were initially on offer under the ninth licensing round but one shallow water block received no bids, a government source said.
The winning bids have to be endorsed by India's cabinet. Of the 34 blocks, eight are deepwater, seven shallow water and 19 onshore blocks.
Official data showed that a consortium led by India's state-run explorer ONGC had provisionally won five of the eight deepwater blocks while Reliance Industries had won two blocks and BG-BHP Billiton the remaining one. ONGC had also won 5 of the six shallow water blocks. Bids for 19 onshore blocks were still being evaluated.
The blocks are being offered under India's New Exploration and Licensing Policy (NELP) which was launched in 1999 offering more attractive terms to boost higher investment in the oil and gas sector of Asia's third-largest oil consumer.
India was hoping for investments of $14 billion from the latest auction. In its previous eight rounds of auctions New Delhi has awarded 235 blocks.
India is currently producing around 720,000 barrels per day (bpd) of oil, mostly from fields awarded decades ago -- less than a quarter of its 3.18 million bpd demand.
Proven oil reserves only amounted to 5.8 billion barrels in 2009 -- enough only to satisfy its oil needs for about five years, according to the BP Statistical Review.
Indian oil firms are seeking foreign expertise to tap into the country's largely unexplored deep offshore water, which will require billions of dollars of investment.
The previous eight rounds have been dominated by Indian firms with ONGC and Oil India bagging more than half of total 234 blocks awarded, and the trend is set to continue as foreign firms are still reluctant.