Chavan: Green signal

New Delhi, Nov. 20: The government today awarded 44 oil and gas blocks on the basis of bidding held under the seventh round of new exploration licensing policy.

While Oil and Natural Gas Corporation (ONGC) and its partners bagged the maximum number of 20 blocks, the BHP Billiton-GVK consortium, which participated in the auction for the first time, bagged 7.

Ninety six companies, including Reliance Industries and the UK’s BG Group, bid for 45 of the record 57 areas put up for auction. There were no bids for seven deep-sea, two shallow-water and three onland blocks.

The Union cabinet, which cleared the proposals, rejected one successful bid for a deep-water block by Cairn India.

Scotland’s Cairn, the sole bidder for the Mumbai Basin deep-water block, did not offer the government an attractive enough share of potential production, or profit petroleum. The terms offered by Cairn “would be detrimental to the government's interest in the future in terms of profit petroleum”, the minister of state in the Prime Minister’s Office, Prithviraj Chavan, told reporters after a meeting of the cabinet committee on economic affairs.

Chavan said investment in the first phase of exploration in the 44 blocks would be about $1.5 billion. The contracts for the blocks will be signed in a month.

The government has announced a seven-year tax holiday for crude oil production. No relief has been offered for natural gas.

Petroleum secretary R.S. Pandey said the government was considering another round of auctions in February 2009. “Blocks are being finalised,” he said.

Sources said the successful bidders had committed themselves to seismic surveys and 141 exploration wells in the first phase.

Of the 11 deep-water blocks offered, Australia’s BHP Billiton and India’s GVK Oil and Gas have jointly got seven, and ONGC-GSPC (Gujarat State Petroleum Corporation Limited) got two. A block each was awarded to Reliance Industries-British Petroleum and ONGC-Oil India.