Page 4 - AsianOil Week 09

AsianOil SOUTH ASIA AsianOil
India’s upstream struggles to ignite investor interest
The government has extended the deadline for its latest licensing round, without giving an explanation
COMMENTARY
WHAT:
The final date for submitting bids for OALP-V blocks is now April 16.
WHY:
Interest in the round may have been muted owing to pricing restrictions.
WHAT NEXT:
A more unified approach to upstream reforms is need to attract foreign investors.
WHILE India’s declining oil and gas production should spur the government to speed up efforts to attract fresh upstream investment, New Delhi has delayed the deadline for its latest licensing round by a month.
Upstream regulator the Directorate General of Hydrocarbons (DGH) revealed this week that the new bidding deadline for 11 blocks had been extended from March 18 until April 16. The DGH did not explain why the bid round had been pushed back, but the offer may have failed to muster as much interest as the government had hoped for.
This round will be the fifth to be held under the Open Acreage Licensing Policy (OALP), with the previous four rounds leading to the award of 94 blocks covering about 136,800 square km.
However, each of those rounds has been dominated by Indian companies, with Vedanta, state-run Oil India Ltd (OIL) and Oil and Natural Gas Corp. (ONGC) winning the majority of the acreages offered. Moreover, the fourth round attracted just eight bids for seven contract areas. International bidders have also largely refrained from participating.
Falling short
The government is offering eight onshore blocks, two shallow-water fields and an ultra-deepwater block under OALP-V, with the blocks covering
19,800 square km. The licences are spread across eight basins, each with a different level of prospectivity.
The government will pick the successful bids using the same criteria that were intro- duced in OALP-IV. The new terms emphasise the importance of work commitments, with successful bids for underexplored Category-II and unexplored Category-III basins being determined by the size of planned exploration programmes rather than the amount of pro- duction offered to the state. Winning bids for blocks in already producing Category-I basins are also selected based upon their exploration programmes and a 50% cap on revenue shar- ing has been introduced.
There are eight Category-I blocks – six onshore, one shallow-water and one deepwater, two Category-II blocks – one onshore and one shallow-water, and one onshore Category-III block in the latest batch of licences.
While pushing back the bid deadline by a month is far from a disastrous misstep, it is symptomatic of the challenges that India is facing as it strives to turn around an ongoing decline in oil and gas production.
Indian crude production shrank by 5.3% year on year in January to 2.7mn tonnes (638,000 barrels per day) and by 5.95% y/y in the April-January period to 27.07mn tonnes (648,000 bpd). January production of natural
250 230 210 190 170 150 130 110
90 70 50 30 10
2010-11 2011-12
2012-13 2013-14
2014-15
2015-16
Oil product consumption
2016-17
2017-18
Supply and Demand
™
2018-19
Data: PPAC
Crude/condensate production
P4
w w w . N E W S B A S E . c o m Week 09 04•March•2020
million tpy