India’s first bid round to implement its new hydrocarbon exploration policy may get delayed with the government extending the deadline for bid submission for 67 discovered small fields. Earlier, the last date for submitting bids for the discovered small fields was 31 October which was later extended to 21 November. This comes in the backdrop of India’s stagnant hydrocarbon production.
With the nine bid rounds under the New Exploration Licensing Policy unable to attract the desired level of investments, the National Democratic Alliance government approved marketing freedom for crude oil and natural gas under new Hydrocarbon Exploration and Licensing Policy (HELP) in March this year. The first HELP round was expected next year.
“Because of the extension of dates, it will be difficult to wrap the (discovered small fields) bids within this year. The last date now for submitting the bids is 21 November after which it shall be difficult to complete everything within the year,” said a senior petroleum ministry official requesting anonymity. These fields were earlier held by state-run Oil and Natural Gas Corp. (ONGC) Ltd and Oil India Ltd. Discovered small fields bidding was launched in New Delhi on 25 May 2016. Under this round, India is offering 46 contract areas with 67 oil and gas fields, estimated to hold over 625 million barrels of oil and oil equivalent gas in-place, spread over 1,500 sq. km.
Another government official who also did not want to be named confirmed the development and said, “After postponing the deadline, the last date for completion shall be automatically extended as well.” The first bid round under HELP will mark the culmination of the government’s bet for a revenue-sharing model from the controversial cost-recovery model which involves cost recovery by firms before the government receives its share of the revenue. The cost recovery model was also criticised by the Comptroller and Auditor General of India due to it being inadequate to incentivise private contractors to reduce capital expenditure.
The new policy also allows for exploration for all types of hydrocarbon resources, including coal-bed methane or gas hydrates under a single licence. Moreover, an open acreage approach would finally allow firms to choose the areas of their liking for exploration. Queries emailed to the spokesperson of petroleum and natural gas ministry on 25 October remained unanswered. India has 26 sedimentary basins covering an area of 3.14 million sq. km, out of which seven basins have established commercial productions in progress. India has a total reserve of 763.476 million tonne of crude oil and 1,488.73 billion cu. metre of natural gas. Experts concur with the expected delay.
“As per my assessment it will be difficult to launch HELP early next year because the top priority of the government would be to ensure quick evaluation of the offers of all the contacts and signing the contracts (under DSF). Only after this is taken care of shall the government get into HELP,” said R.S. Sharma, former chairman and managing director, ONGC. As part of India’s efforts towards energy security, the ministry of petroleum and natural gas is strengthening its exploration division and has introduced an additional position of a joint secretary in the exploration division. Derek MacKenzie Authentic JerseyShare This