Shell mulling bidding in oil exploration round

Shell India, the subsidiary of the global energy giant, is studying the possibility of bidding in the next exploration licensing round, its chairman Vikram Mehta said.

“We are studying the data,” Mehta told DNA, when asked about the firm changing its outlook on the upstream sector in India. Mehta disputed the allegation that policy flip-flops by the Indian government, including over gas pricing and rights-of-first-refusal, was the reason why big global petroleum giants such as Shell have kept away for many years.

“It is more because of the internal priorities and strategies of these corporations,” Mehta said. “If you have finite resources and 50 places that offer you the same attractive terms, some of them will lose out,” he said.

Mehta also dismissed suggestions that Shell is not aggressive on its retail rollout, saying that the company is indeed planning to sell some of its plots, but only because of a change in strategy. Mehta said the firm has decided to shift focus to cities and away from highways. As a result, he said, plots suited for diesel stations, next to highways, are being sold.

The company has outlets in 12 cities, totalling around 72 — mostly in the south and the west of the country. “We will continue to focus on these areas (south and west India),” he said, adding that around 40 pumps are under construction. “Our target is not to cover an entire region, but to cover each city where we are present well. We want to have at least 25% of the fuel sales of each of these 12 cities,” he said.

Mehta refused to give projections on retail outlet numbers, pointing out that the company was close to achieving its targeted market-share in Bangalore with just 18 outlets out of a total of 350, in 2007.

On the controversy over interpretation of rules by the private sector and the government — for example on Cairn Energy and on extension of tax breaks to gas as well as oil — Mehta said that Indian firms at least have fora to challenge the decisions of the government.

“There will always be differences in interpretation. But it’s a situation where you can challenge what the government says in the courts,” he said, adding that he has publicly voiced his dissent on issues such as gas not being allocated tax breaks like crude oil under Nelp.