Further tweaks possible as India's marginal oil and gas block bids fall short of expectations

KOLKATA (miningweekly.com) – In a rearguard action, the Indian government is considering further tweaks and changes to the ongoing auction of 67 marginal oil- and gasfields – a week before the extended deadline of November 21.

While no official information is available on the number of bids or valuations received for these fields, officials, who asked to remain anonymous, have said that these were “far below” government expectations and that work was under way on additional guidelines and changes to the existing ones to woo investors.

One of the options under consideration is clubbing together some of the 67 marginal oil and gas blocks, wherein more viable blocks could compensate for comparatively less viable ones, an official said.

However, no information was available about the demands from some prospective investors that the geographical area of each block be increased, which would give investors the option to explore and develop across larger areas than currently on offer.

It is also possible that the Oil and Natural Gas Ministry will agree to another deadline extension. The initial October 31 deadline has already been shifted to November 21 after bids fell short of government expectations.

Worried over poor response from domestic and foreign private investors, the government’s last hope is aggressive bidding for the blocks by national exploration and production major, ONGC.

Interestingly, all the minor oil and gas blocks now up for bidding had initially been allocated to ONGC, but over the years, the company had either surrendered them after finding the blocks unviable or government had seized them owing to delays in development.

The current auction is the first to be kick-started under the New Exploration and Licensing Policy, under which nine rounds of auction have been completed but the tenth has been nixed to put the Hydrocarbon Exploration and Licensing Policy (Help) in place. Under Help, exploration and production companies will have the freedom to explore and extract any fuel they discover - be it coalbed methane, shale gas, oil or gas - without having to seek fresh approvals for each resource discovered and that too under a composite revenue sharing agreement.

The total oil and gas reserves in the blocks up for bidding have been estimated at 625-million barrels of oil or oil equivalent of gas, spread across 1 500 km².