Indian energy firms to rule oil, gas asset auction

Indian energy firms to rule oil, gas asset auction

India’s top energy firms are set to win the most blocks in the country’s gas-rich offshore exploration areas when the results of the latest asset auction are announced this week, a senior official said on Tuesday.

Leading state-run energy exploration company Oil and Natural Gas Corp. (ONGC) will be awarded 25 blocks in the country’s largest ever sale, the official, who would not be identified, told Reuters.

Domestic private firm Reliance Industries Ltd. will get seven deepwater blocks in the gas-rich eastern offshore region, he said.

The sixth round of India’s New Exploration and Licencing Policy (NELP) attracted interest from 36 foreign firms, the largest ever overseas interest.

Oil Minister Murli Deora said last week the government would announce the awards by Friday.

Britain’s Cairn Energy in partnership with ONGC, and Australia’s Santos

India had offered 55 blocks in its latest licencing round. The government previously said it had received 165 bids from domestic and overseas players for 52 blocks. There were no bids for three blocks.


Indian companies submitted strong financial bids to get the oil and gas blocks, and fight off global majors.

“Indian companies are no less than foreign companies on technical criteria, but on financial parameters they were more than aggressive,” said a senior official with India’s upstream regulator, the Directorate General of Hydrocarbons (DGH).

“ONGC may win a good number of blocks but where it has submitted a bid with ENI , BG and BP , it may not win as global players don’t want to take unnecessary high risks,” he said.

India expects investment of at least $350 million in the first four years of exploration in the 52 blocks, but the real figure is likely to be much higher.

Of the 25 blocks ONGC is expected to win, only one will be in partnership with a major foreign firm — a tie up with Britain’s BG . ONGC and global giants jointly bid for eight blocks.

“Global companies will come here to do business and make profits, accordingly they submitted conservative bids compared to Indian companies bids,” an international oil and gas analyst said.

Foreign players are also apprehensive over the seriousness of the government to implement oil and gas reforms.

India freed retailing of oil products in 2002 but it still continues to directly or indirectly subsidise the sector, and companies are not allowed to charge market rates for fuel sales.

“There are lots of distortions in pricing and the foreign companies are not sure what the government stand will be in next few years on reforms,” he said.

“Indian laws do not permit export of gas. So the pricing of gas is also another issue.” he said

India, Asia’s third-largest oil consumer, imports 70 percent of its crude and is keen to quickly tap any remaining domestic reservoirs to help offset its growing dependence on imports.

Source: Reuters

Share this post