Vedanta bags 41 oil, gas blocks in maiden open acreage auction

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Vedanta bags 41 oil, gas blocks in maiden open acreage auction

New Delhi: Anil Agarwal-led Vedanta Ltd has bagged 41 out of 55 oil and gas exploration blocks offered in India’s maiden open acreage auction, the Directorate General of Hydrocarbons (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 received one block each, DGH said, while 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 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 the country’s import dependence for oil from around 80% now to 67% by 2022, in line with (the) PM’s vision. The development further strengthens our vision to invest in India and contribute 50% of India’s domestic crude oil production,” 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 for the rest. Except for the two blocks that received three bids each, all the other 53 had just two bidders.

Neither 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. The government had in July last year allowed companies to carve out blocks of their choice, with a view to bring around 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 currently not under any production or exploration licence. The EoIs can be put in any time of the year, but are accumulated twice annually.

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 five-mark advantage. The 55 blocks have a total area of 59,282 sq km. This compares to around 1,02,000 sq km that is currently under exploration. Blocks are awarded to the company which offers the highest share of oil and gas to the government as well as commits to do the 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 the country’s oil import bill by 10% to 67% by 2022 and to half by 2030. India currently imports 81% 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 the 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. So far 256 blocks had been offered for exploration and production since 2000. The last bidding round happened in 2010. Of these, 254 blocks were awarded.

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