The countdown has commenced for India’s sixth round of bidding for oil and gas exploration blocks under the New Exploration Licensing Policy (NELP-VI).
The bid closing date for NELP-VI is Sept. 15, and the awards will be announced in mid-January.
Nearly 70 companies, consultants, and organizations have expressed interest in NELP-VI, which offers 55 blocks-25 onshore, 6 in shallow water, and 24 in deep water. This is the largest ever acreage India has offered-about 355,000 sq km-and the largest number of blocks.
At least two major finds over the past 5 years have led many global oil majors to reevaluate Indian plans. These were Reliance Industries Ltd.’s large KG basin gas strike and Edinburgh-based Cairn Energy PLC’s onshore Rajasthan oil discovery in northwestern India, the most substantial recorded in India.
Interest grows
India’s total hydrocarbon resources, including those in deepwater, are estimated at around 28 billion tonnes of oil equivalent. Overall, analysts believe that more than 81% of the country’s hydrocarbon potential remains to be explored.
Since 2000, an average of four discoveries/year of oil and gas has been reported. However, 15 finds were reported last year, and India’s total gas reserves have increased by over 60% in the last 4 years.
“After five rounds, the area under exploration has increased more than three times, reserve accretion is already around 600 million tonnes, and $5 billion of investment commitment has been received,” said Indian Petroleum Minister Murli Deora.
The discoveries, combined with high oil prices and India’s increasing demand for hydrocarbons, have resulted in companies’ increasing willingness to invest in exploration in the country, although it remains to be seen whether the blocks on offer contain reserves as lucrative as those Cairn Energy has enjoyed.
Bid consortiums forming
NELP-VI is becoming a catalyst for the establishment of joint ventures between international energy companies and domestic oil producers to bid the NELP-VI round:
Bharat Petroleum Corp. Ltd. (BPCL) has entered into a memorandum of understanding with Brazil’s state-run Petroleo Brasileiro SA (Petrobras) and UK-based Foresight Oil Ltd.
Gas purveyor GAIL (India) Ltd. said it also will bid jointly with Petrobras, while Australian oil major OilEx NL has firmed up plans to tie up with Videocon Industries Ltd.
India’s largest refiner, state-run Indian Oil Corp. (IOC), is preparing a new strategy. Under NELP-V, with Oil India Ltd. (OIL) it bid unsuccessfully for minority stakes of 15-25% for various oil and gas blocks. IOC now is eyeing a majority stake only in shallow-water and onshore blocks. While its association with OIL will continue, IOC is gearing up to partner with other companies to add technical and financial strength to a proposed new consortium.
Reliance Energy and Essar Oil Ltd. are holding discussions with Origin Energy CGS, and Tata Petrodyne Ltd. has been discussing partnerships with BG Exploration & Production Ltd. and BP India Services.
Premier Oil PLC, London, is in talks with various local companies, including state-run Oil & Natural Gas Corp. (ONGC), BPCL, OIL, and Hindustan Oil Exploration Co.
After acquiring a $1 billion loan to develop its oil and gas assets in northern India, Cairn Energy CEO Bill Gammell said the company will bid for substantial new acreage in the forthcoming round. Cairn already has an interest in 13 blocks.
In addition, a dozen companies have shown interest in taking a stake in Gujarat State Petroleum Corp.’s (GSPC) gas field off Andhra Pradesh. In June, GSPC found new reserves of high quality oil and gas on the block. GSPC is interested in selling 20-30% of its 80% participating interest in the block (OGJ Online, July 24, 2006).
Data room visits
Early indications, based on data room visits and data package purchases, suggest that global oil majors Chevron Corp., ExxonMobil Corp., ConocoPhillips, and Royal Dutch Shell PLC may be interested in investing in India’s sedimentary basins.
Blocks are available in the following basins: Andaman, Assam Arakan, Cambay, Cauvery, Deccan Syneclise, Ganga, Kerala Konkan, Krishna Godavari, Mahanadi, Mizoram, Mumbai, Palar, Purnea, Rajasthan, Saurashtra, South Rewa, and Vindhya.
Companies that have bought or requisitioned data for the blocks include Petrobras, Cairn Energy, BHP Billiton Ltd., Anadarko Petroleum Corp., Roc Oil Ltd., OIL, EOG Resources Inc., Kerr-McGee Oil & Gas Corp., ONGC, BG, Niko Resources Ltd., Beach Petroleum NL, Shell, Chevron, and Tullow Oil Ltd.
According to industry sources, the government had collected $12.49 million from the sale of data and $1.59 million for the requisition of data as of late July.