India receives 13 applications from firms under second round of oil and gas auctions gas vs diesel prices

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ET reported that the government has received 13 applications or Expressions of Interest (EoIs) from companies showing interest for oil and gas blocks offered for bidding under the second round of Open Acreage Licencing Policy (OALP) auctions, fresh data from the Directorate General of Hydrocarbons (DGH) showed. This is 76 per cent less than the 55 EoIs that were received in the first round.

The country has adopted a new bidding model under which it holds bi-annual oil and gas auctions where an investor gets an opportunity to carve out blocks of their choice on the basis of the information available in the National Data Repository (NDR).

According to K Ravichandran, Senior Vice President at research and ratings agency ICRA, 13 EOIs indicated low interest. “This comes at a time crude oil prices have started increasing which should have evoked interest to invest in upstream assets. “Also, the overall investment environment in the sector is improving. Persisting concerns about data deficiency and regulatory issues may be the reasons why this round did not receive much interest,” he said.

The first round of oil and gas auctions is ongoing. It had witnessed Anil Agarwal-led Vedanta Ltd and state-owned Oil and Natural Gas Corporation (ONGC) emerging as the top bidders. Replying to news reports on Vedanta bagging about 40 of the 55 block offered in the first round of OALP a DGH official said, “The bids are still under consideration, it will not be right to comment at this point of time.”

According to DGH, the blocks offered under the first round are expected to be awarded by June 2018 after the approval of a Empowered Committee of Secretaries and a Group of Ministers. The 55 blocks offered in the first round had received 110 bids by 9 domestic companies. Of the nine domestic companies which participated in the technical bidding process, 5 were public sector units including ONGC, Oil India, GAIL (India), IOC, BPRL and four private companies including-Vedanta, Selan, HOEC and Sun Petro.

The new OALP regime of auctions is part of a larger effort by the government to quickly ramp up India’s stagnant oil and gas production. The country’s oil output fell for the sixth straight year in 2017-18 to 35.68 million tonne, pushing the country’s import dependence for crude further to 82.8 per cent and dampening prospects for the centre’s plan to cut reliance on energy imports by 10 per cent through 2022. The ongoing first round of oil and gas auctions had not received any interest from international players.

Commenting on the investor participation in the first round, the then DGH Atanu Chakraborty had said OALP is an ongoing process and over 100 entities, of which 60 per cent are global majors, had bought data from the upstream regulator. “They tend to take a long time to decide on their investment in India. Naturally, one did not expect so many of them to come in the first round itself. In the first round, we expected major companies from India to come and that is how it has panned out. The amount of interest in the EOI level and at the bidding level far exceeds general expectations.”