Vedanta bags 41 oil blocks, OIL 9, ONGC 2 in maiden open acreage auction

A bird flies past the logo of Vedanta installed on the facade of its headquarters in Mumbai | Photo: Reuters

Mining mogul Anil Agarwal-led Vedanta Ltd has bagged 41 out of 55 oil and gas exploration blocks offered in India's maiden open acreage auction, upstream regulator DGH said on Tuesday.     

State-owned Oil India Ltd won nine blocks, while Oil and Natural Gas Corp (ONGC) managed to win just two.

State gas utility GAIL, upstream arm of Bharat Petroleum Corp Ltd and Hindustan Oil Exploration Co (HOEC) received one block each, DGH said, giving out the list of winners of Open Acreage Licensing Policy (OALP) round-1.  

Vedanta, which had put in bids for all the 55 blocks, won the right to explore and produce oil and gas in 41 of them.

"We will work hard to make the best of this opportunity. We are an energy deficient country and policies like OALP will help reduce country's import dependence for oil from around 80 per cent now to 67 per cent by 2022, in line with (the) PM's vision."

"The development further strengthens our vision to invest in India and contribute 50 per cent of India's domestic crude oil production. In keeping with our values and ethos, we will continue to focus on sustainability and development expertise for people and communities to enhance lives," Agarwal said.

 

At the close of the bidding on May 2, ONGC had bid for 37 blocks either on its own or in consortium with other state-owned firms. OIL bid for 22 blocks in a similar fashion. 

Vedanta was the sole bidder for two blocks and had either ONGC or OIL as a direct competitor in the remaining.

Except for the two blocks that received three bids each, all the other 53 had just two bidders.

Neither local giant Reliance Industries nor any foreign company participated in the auction, a first since India began offering oil and gas area for exploration and production through bids in 1999.

 

ALSO READ: Vedanta to invest $2.3 bn to up oil and gas reserve base by 375 mn barrels    

India had in July last year allowed companies to carve out blocks of their choice with a view to bringing about 2.8 million sq km of unexplored area in the country under exploration.

Under this policy, companies are allowed to put in an expression of interest (EoI) for prospecting of oil and gas in an area that is presently not under any production or exploration license.

The EoIs can be put in any time of the year but they are accumulated twice annually.

As many as 55 blocks were sought for prospecting of oil and gas by prospective bidders, mostly by state-owned explorers, ONGC and OIL, and private sector Vedanta by the end of the first EoI cycle on November 15, 2017, official sources said.

The blocks or areas that receive EoIs at the end of a cycle are put up for auction with the originator or the firm that originally selected the area getting a 5-mark advantage.

The 55 blocks have a total area of 59,282 sq km. This compares to about 1,02,000 sq km being under exploration currently, they said.

 

Blocks are awarded to the company which offers highest share of oil and gas to the government as well as commits to do maximum exploration work by way of shooting 2D and 3D seismic survey and drilling exploration wells.

Increased exploration will lead to more oil and gas production, helping the world's third largest oil importer to cut import dependence. 

Prime Minister Narendra Modi has set a target of cutting oil import bill by 10 per cent to 67 per cent by 2022 and to half by 2030.

Import dependence has increased since 2015 when Modi had set the target. India currently imports 81 per cent of its oil needs.

The new policy replaced the old system of government carving out areas and bidding them out. It guarantees marketing and pricing freedom and moves away from production sharing model of previous rounds to a revenue-sharing model, where companies offering the maximum share of oil and gas to the government are awarded the block.

The government till now has been selecting and demarcating areas it feels can be offered for bidding in an exploration licensing round.

So far 256 blocks had been offered for exploration and production since 2000. The last bid round happened in 2010. Of these, 254 blocks were awarded. But as many as 156 have already been relinquished due to poor prospect.  



Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel