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Government to reach out to foreign players for oil exploration
The government is planning an aggressive reach out to foreign players to seek their participation in future exploration licensing rounds as worries mount over their near-absence in previous auctions and rising concentration of exploration acreage in just a few hands. The government is planning to shift away from usual roadshows in global investor hot spots and, instead, seek out the managements of international oil companies individually to apprise them of the opportunities in India’s hydrocarbon sector.
“Roadshows haven’t really worked well for us. They are mostly populated by analysts and not decision-makers,” said an official. “We want to target decision-makers. And so, are planning to directly reach out to the management of global oil companies.”
A direct conversation with top executives can be far more productive as it would not only acquaint them with latest policy reforms but would also give them confidence and comfort that they can easily reach officials concerned in case they need any additional information or clarification, the official said.
The oil ministry is planning to contact more than a dozen international oil companies, including super majors and national oil companies, that invest outside their own countries. The government would also participate in major industry events which have significant footfalls and presence of top executives.
Just one foreign player and very few private players have participated in three rounds of an auction held under the new Hydrocarbon Exploration and Licensing Policy (HELP) in the last two years despite a string of roadshows in Singapore, Abu Dhabi, London, Aberdeen, and Houston. The auctions have also seen a concentration of acreage with Vedanta winning 51 blocks, or about 60%, of the total. Vedanta, Oil India and ONGC together make up 94% of all blocks awarded.
“Past attempts at boosting domestic production have been relatively unsuccessful as a key issue – concentration – has remained unresolved,” a research paper published by The Oxford Institute for Energy Studies in November 2016 said, citing how the holding of the majority of acreage by state-run ONGC and Oil India didn’t help boost local output. “The NELP regime arguably failed to improve the diversity of operators in India’s upstream, leading to a ‘holdup problem,’” the paper said.
Holdup problem is where areas of acreage that were bid out were locked up in contracts with little progress made in exploring them. NELP or New Exploration Licensing Policy preceded HELP.
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