New Delhi, Oct 21: Global major BHP Billiton is pulling out of nine oil and gas blocks in the country, threatening to drag down investor sentiment that is trying to come to terms with the exit of Posco and ArcelorMittal from their projects.

“The decision to relinquish these blocks is the result of an exploration portfolio review and the inability to carry out operations in these blocks,” BHP said in a statement.

The company said it had relinquished nine exploration blocks awarded between 2008 and 2010 under the New Exploration and Licensing Policy (Nelp) after it failed to secure clearances from the defence ministry.

“BHP (Billiton) is moving out as it cannot get access to the block it won in a globally competitive auction. The government has the sovereign right over the blocks, yet policy conflict between different ministries blocked the access to explore for energy. This is the tragedy … it would have an impact on investor sentiment,” said Ashu Sagar, secretary-general of the Association of Oil and Gas Operators.

BHP’s exit comes just when the country is going all out to woo foreign direct investments to protect its current account deficit, roiled by the volatility in the rupee rates. Besides, an oil and gas block auction is just round the corner in January and the government is expecting strong foreign investor interest.

The pullout by BHP Billiton is the latest in a series of large global companies scaling back or ending their operations in the country in the face of bureaucratic delays and disagreements with the government.

Earlier this month, Walmart parted ways with its Indian joint venture partner Bharti following complaints about restrictive regulations on foreign investment.

ArcelorMittal and Posco have abandoned their plans to set up greenfield plants in Odisha and Karnataka, respectively, after local opposition, difficulties in acquiring land, limited availability of coke, iron ore and power linkages delayed the projects.

R.S. Sharma, former chairman of ONGC, said, “Sentiments are already negative and the exit of BHP Billiton is going to do more harm.”

In fact, there have been just two recent instances of significant foreign investments in oil and gas — Vedanta Resources’ acquisition of a controlling stake in explorer Cairn India and BP’s $7.2-billion deal to buy 30 per cent in some blocks operated by Reliance Industries.

Exploration efforts, too, have brought little by way of major finds, partly because of delays over permissions but also in some areas because of geological factors.

BHP Billiton said it had exited the six Mumbai basin blocks it was awarded with GVK in the seventh round of Nelp in 2008 and three blocks it had won in the Nelp-VIII round.

“BHP Billiton will preserve its 50 per cent interest in its Nelp IX block, which is operated by BG Group. We are currently awaiting the results of the seismic survey,” it said.

BHP held a 26 per cent interest in the Nelp-VII blocks, while Hyderabad-based infrastructure and energy-focused conglomerate GVK owned the remaining 74 per cent.

Melbourne-based BHP, which has operations in more than 100 locations worldwide, held 100 per cent interest in the Nelp-VIII blocks.

BHP’s exit ahead of the 10th round of Nelp may be bad news for the oil ministry’s efforts to attract foreign investors.

The ministry is looking to offer as many as 68 blocks, or areas, for exploration of oil and gas in the 10th round of Nelp. This will be the second highest offering of blocks since the start of Nelp 1999.