Page 4 - AsianOil Week 41 2022

AsianOil COMMENTARY AsianOil

India kicks off another oil

and gas licensing round

India continues to push for increased exploration, but so far the response has

been tepid.

XXX INDIA is offering rights to 26 oil and gas blocks worldwide are eager to gain a foothold in India,
and 16 coal-bed methane (CBM) blocks in its where fuel demand is expected to keep rising as
WHAT: latest exploration licensing contest, the country’s the country’s economy grows,” he said.
India is offering rights upstream regulator announced last week, as New India’s dependence on oil imports risks
to 26 oil and gas blocks Delhi looks to expand domestic crude supply. becoming ever greater as domestic demand con-
and 16 coalbed methane “There is an unprecedented interest in Indian tinues to rise. National consumption is predicted
blocks in its latest exploration and production by global oil com- to surge to 3.3bn barrels annually by 2040, Jain
licensing round. panies,” Indian Oil Minister Hardeep Singh Puri said, from a projected 1.6bn barrels this year. The
said last week following a roadshow in Houston target is to reduce import dependence by at least
WHY: in the US. 10% in the coming years.
The country is trying India has emerged as the third-biggest oil India awarded some 31 contracts for oil
to reverse rising importer in the world, relying on close to 85% and gas developments last month as part of
dependence on oil of imports to cover its needs, and with global oil its third Discovered Small Fields competitive
imports at a time when prices now soaring, this is coming at a significant licensing round – the largest-ever offering of
global prices are very cost. acreage where there are known to be oil and gas
high. The 26 blocks on offer include 15 in ultra- accumulations.
deep waters, eight in shallow waters and three
WHAT NEXT: onshore. They span 223,000 square km. Windfall tax
A windfall tax imposed According to Reuters, Puri met in Houston Despite boosting upstream incentives in oth-
on the oil industry earlier with executives from ExxonMobil, oilfield ser- er ways, the government also introduced a
this year is likely to vices firm Baker Hughes and LNG producers. windfall tax on domestic oil production in
continue undermining India is seeking US technical expertise for off- July, citing the fact that producers are earning
the positive incentives shore oil production and for ethanol and sul- more from high prices. The main domestic oil
that the government has phur recovery at oil refineries, the ministry told companies – ONGC, Oil India Ltd (OIL) and
provided. Reuters. GAIL – all reported record net profits in the
Thus far there has been only tepid interest in 2022 fiscal year.
India’s upstream sector from leading interna- New Delhi took the step as part of efforts
tional players, with the licensing rounds instead to curb its widening trade deficit, which has
being dominated by domestic state-owned com- increased to a record-high level this year as a
panies. This is despite the country trying to woo result of a weak rupee. It has been reviewing the
investors by offering lucrative market-based gas tax on a fortnightly basis, to account for changes
pricing and exploration-related incentives. in oil prices. It raised the windfall to INR11,000
Also in Houston was Indian Petroleum Secre- ($134) per tonne on October 16, from INR8,000
tary Pankaj Jain, who described the country as a previously. In the summer it reached a height of
destination of energy opportunities, noting that INR23,250.
the latest licensing round offered “ease of doing When the tax was first introduced, it was esti-
business for bidding and assured an open-door mated that it would raise some INR656bn ($8bn)
policy to resolve any issue faced by the industry.” over the current fiscal year. The government said
“India wants to be the new destination for it would only consider ending the tax if global oil
global energy players,” he said. “Oil producers prices dropped below $40 per barrel. ™

P4 www. NEWSBASE .com Week 41 18•October•2022