India’s OALP auctions draw strong interest

Auctions of upstream assets under the round II and III of the Open Acreage Licensing Programme (OALP) have attracted strong interest from bidders. The Indian Government had offered a total of 32 oil and gas blocks and five coal-bed methane blocks for auction under the OALP II and III in early 2019. The leading bidders included a consortium of India’s Reliance Industries and UK’s BP, India’s Vedanta, Oil and Natural Gas Corp (ONGC), among others. While the RIL-BP group bid for one asset, Vedanta and ONGC bid for 30 and 20 assets, respectively. The Government had awarded 55 Blocks under the OALP round I in 2018.

The other bidders in the bid rounds included Oil India that bid for 15 blocks, meanwhile, Indian Oil Corp, GAIL (India) and Sun Petrochemicals have bid for two blocks each. The auctions come as part of India’s efforts to liberalise the oil and gas sector and invite private and foreign investors to develop around 2.8 million sq km of unexplored upstream area. The 14 blocks offered under OALP II cover exploration and production area of around 30,000 sq km, and the 23 blocks under OALP III cover over 31,000 sq km area. OALP is expected to raise India’s exploration to 300,000 sq km by end 2019, from 90,000 sq km in 2017.

OALP offes reduced royalty rates, no oil cess, uniform licensing system, marketing and pricing freedom, revenue sharing model, exploration rights on all retained area for full contract life, among others. India is the world’s third largest energy consumer and is likely to have one of the fastest growing energy markets of the world in the coming years. The Government is aiming to cut India’s crude oil import by 10 per cent by 2022 by increasing domestic output. India holds estimated oil and gas deposit of 28 trillion tonnes, of which 60 per cent is yet to be harnessed. Since 2000, India has allotted more than 250 oil and gas blocks.