R.S. Pandey in New Delhi on Thursday. Picture by Ramakant Kushwaha

New Delhi, April 9: India today launched its biggest auction of oil and gas blocks at a time when global players are slashing exploration and production budgets because of recession.

“There were options either to go ahead or sit tight. The most effective antidote (to the recession) is the generation of economic activity. One should not halt something which is an ongoing process,” petroleum secretary R.S. Pandey said at the launch of the eighth round of the new exploration and licensing policy (Nelp-VIII).

However, Pandey said the government might not allocate any block if it received a poor response. “If the response is poor, we have the option not to allocate, and if it is good, we will offer another 30-40 blocks in the next phase,” he said.

Of the 70 blocks on offer, 24 will be deep-water, 28 shallow-water and 18 onland. They are spread throughout the country, including two in Bengal.

“About 30 per cent of the blocks are from the previous rounds and about 10 are from the nomination blocks (pre-Nelp phase),” Pandey said. The government has also put up for bidding 10 coal bed methane blocks.

The bids will close on August 10, and the contracts are expected to be signed in four months.

Given the jittery market sentiment, energy analyst Arvind Mahajan of KPMG felt mostly Indian players would participate in the auction. Global majors such as Royal Dutch Shell, Exxon Mobil and ConocoPhillips have revisited their growth plans and cut their investments in exploration and production.

“This is the best time to get exploration assets. It will be available more easily. So, I think there will be medium to aggressive bidding,” V.K. Sibal, director-general of hydrocarbons, said.

For the first time, the government is offering blocks in the western Andaman region, which is close to the hydrocarbon-rich areas of Indonesia and Myanmar.