From Platts:

India has decided to award the bulk of the operating licenses to new players following its first oil and gas fields auction in six years as New Delhi steps up efforts to boost domestic oil and gas production and reduce its dependence on crude oil imports.

The federal cabinet Wednesday approved the award of operating licenses for 31 contract areas comprising 44 oil and gas field under a revenue-sharing model. The list includes many new private companies that are venturing into the upstream oil and gas sector for the first time.

These contract areas would monetize 40 million mt of oil and 22 Bcm of natural gas over 15 years for the Indian government, according to an official statement.

The approved contract areas comprise 28 onshore and 16 offshore oil and gas fields of state-owned explorers Oil and National Gas Corp. and Oil India Ltd.

While some state-owned oil companies such as Indian Oil Corp. and OIL were on the list, it also figured private companies such as Sun Petrochemicals Pte. Ltd., Mahendra Infratech Pte. Ltd. and Ramayna Ispat Pte. Ltd., signaling New Delhi’s intention to encourage the entry of more private participants in the oil and gas industry at a time when India’s oil demand is growing at double-digit rates.

According to Platts Analytics, India’s oil demand growth will outpace China’s for the third year in a row in 2017. Indian oil demand is expected to grow at about 7% to 4.13 million b/d and Chinese demand by about 3% to 11.5 million b/d.

Prime Minister Narendra Modi presided over the cabinet meeting to decide the outcome of his government’s first auction of oil fields.

“Single bids were received for 14 contract areas, multiple bids were received for 17 contract areas,” finance minister Arun Jaitley said after the cabinet meeting.


The awarded fields were originally part of 67 small and marginal oil and gas fields offered in May under a revenue-sharing model where the contractor would start payments to the government as soon as production starts at a field.

The contract areas were discovered long ago, but could not be monetized due to various hurdles such as isolated locations, small size of reserves, high development costs and other technological constraints.

The final signing of the awarded contracts should take another two months, oil ministry officials said.

The 67 offered fields were put into 46 contract areas and put on offer through online international competitive bidding July 15.

A total of 134 were received for 34 contract areas in the bidding process that closed in November.

Finally, operator licenses were awarded for 31 contact areas as three areas did not qualify in the final round of the bidding process.

A total of 47 companies submitted bids, of which 43 were Indian.


Oil minister Dharmendra Pradhan said in May that the award of the offered 67 fields would unlock around Rupee 700 billion ($10.47 billion) worth of oil and gas reserves.

The fields were estimated to hold proven reserves of up to 625 million barrels of oil and gas equivalent, according to the ministry’s assessment.

In the latest auction, companies were allowed to bid for more than one exploration block.

Global companies were also allowed to bid for fields without any mandatory domestic participation.

Since 1999, India has conducted nine auction rounds under the New Exploration Licensing Policy, or NELP, for oil and gas blocks and four rounds for coalbed methane.

Under NELP IX in 2012, 34 blocks were offered and received 74 bids for 33 of them. Of this, production sharing contracts have been signed for 19 blocks. The Hydrocarbon Exploration Licensing Policy, or HELP, has replaced NELP.

India is making a concerted effort to lower its reliance on imported crudes with the government focusing on boosting domestic production, promoting renewables, and improving the refining process at a time of increasing demand.

Highlighting the growing importance of energy security, Modi said in December that India would strive to reduce crude imports by 10% from current levels by 2022.

For a country dependent on imports for 80% of its crude oil needs, India’s oil import bill is subject to wild swings linked to international prices, which in turn has repercussions on the country’s current account balance and overall economy.

Pradhan has said that India would reduce its dependence on crude imports with the help of a five-point plan — raising domestic oil and gas production, improving energy efficiency, promoting alternative fuels and renewables, demand substitution, and improving the refining process.

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