RIL, ONGC stay away from bidding for 46 fields; Cairn India, five foreign firms participate
Downturn in the global energy sector, uncertain prospects of blocks offered and investors looking at India with cautious optimism resulted in lukewarm response for the 46 discovered small and marginal oil and gas fields put on the block by the government.
According to sources, close to 42 bids were received on Monday for 34 blocks out of the total fields on offer. Amongst the bidders, Cairn India and Hindustan Oil Exploration Co (HOEC) were major bidders along with five smaller foreign firms.
Indian and global energy majors like Reliance Industries, BP Plc, Exxon Mobil, Chevron and others kept away from the bidding process. Even state-owned firms ONGC, Indian Oil Company (IOC) and Oil India Limited (OIL) decided not to bid for the discovered small blocks.
The ministry of petroleum and natural gas (MoPNG) had decided to monetise 67 discovered small fields surrendered by ONGC and OIL in the middle of this year.
Dharmendra Pradhan, minister of state (Independent Charge) for petroleum and natural gas, had said that the objective of the whole exercise was to operationalise the discovered fields to increase oil and gas production in the country and reduce the dependence on imports for meeting domestic energy needs.
India is looking to bring down its reliance on imports to meet its oil and gas demand by 10% by 2022.
To make the bidding attractive for investors, the government had offered free pricing and marketing, allowed overseas investors to bid on their own and had done away with the mandatory prior technical experience. It had also waived off the 20% cess on crude oil production and customs duty on capital goods imported for developing these fields.
E S Ranganathan, managing director of Indraprastha Gas Ltd (IGL), said that it was logical that ONGC and OIL would not have participated in the auction as they have relinquished these blocks.
He speculated that bigger players like Reliance and BP Plc may have skipped the auction as the blocks were too small for them to make commercial sense.
Ranganathan, however, said bigger players would have given the auction “a stature”.
Arjun Singal, chief editor of energy magazine Dew Journal, said a slowdown in the global energy sector, cautious approach of investors towards India and a question mark over the “prospects” of the fields put on the block could have contributed to the tepid response from investors.
“Many players were not too sure about the prospects of the blocks. They must have thoroughly studied the potential of the fields that were offered for bidding. If they had found that there was a prospect, why would they have not come forward for it?” he said.
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