Govt hopes for plum bids at oil auction
New Delhi: The government is optimistic that global energy firms such as Rosneft, BP, Exxon Mobil and Royal Dutch Shell will participate in the first round of auction of oil and gas blocks under the Open Acreage Licensing Policy along with national oil firms.
This round will allow firms to decide on pricing and marketing along with the freedom to carve out the area for exploration.
"The bidding for round one under OALP would start on January 16, 2018. India is one of the most exciting E&P destinations of the future. All global majors, independents, minors, national oil companies, international oil majors and domestic firms are invited to participate and make a difference," the directorate-general of hydrocarbons said.
The bidding process will be through an electronic portal operated by Mjunction, a joint venture promoted by SAIL and Tata Steel.
The upstream oil regulator had thrown open its data centre to exploration and production firms to study the geological data for 26 oil and gas fields .
Under the new bidding round, an upstream player will be allowed to explore both conventional and unconventional oil and gas resources, including coal bed methane, shale gas and oil and gas hydrates under a single licence.
At present, the price of gas is fixed administratively by the government, which has led to loss of revenue, a large number of disputes, arbitrations and court cases.
The bid round would mark a shift to a revenue-sharing model from the controversial cost-recovery model, which involves cost recovery by firms before the government receives its share of revenues.
In the new OALP, the contractor will have freedom of pricing.
At present, the government earmarks the quantum of gas to be sold to different sectors such as fertiliser and power. However, in the new policy, the contractor will have the freedom to market the gas or oil within the country.
Though a shift to the new regime may not result in additional revenues for the government, it will ensure that if companies earn more, the government gets progressively higher revenue.
It will also safeguard the government's interests in case of a windfall arising from a price surge or a surprise discovery. This will create greater transparency, and a hassle-free operational environment.