Oil, gas majors skip auction of small fields

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Mumbai, November 22
State-owned ONGC as also Reliance Industries and BP plc on Monday skipped the auction of much-hyped discovered small oil and gas fields, that ended with lesser known firms piling up bids for 34 out of 46 areas on offer.
Of the 34 areas bid for, 14 got single bids.
All the 26 onland areas received bids, although nine had only single bidders. Of the 20 offshore blocks on offer, only eight received bids, five of which were single company offers. As many as 134 e-bids were received at the close of auction this afternoon by 42 companies bidding alone or as part of some consortium, according to information available from the Directorate General of Hydrocarbons (DGH). Notable among the bidders was Cairn India, which bid for two fields, and Hardy Exploration of UK that bid for one area. Other notable private sector bidders were Hindustan Oil Exploration Co (HOEC), Adani Welspun and Quippo Oil & Gas, while upstream units of state-owned Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) as well as Indian Oil Corp (IOC) and GAIL India Ltd also bid.
The 46 fields offered in the bid round were made up of 67 oil and gas discoveries “surrendered” by state-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd on finding them commercial unviable to develop under price control regime. When the bid round was announced in May, ONGC Chairman and Managing Director Dinesh K Sarraf had said that his company will bid for the fields as they were viable under the liberal terms of free pricing of oil and gas and liberal fiscal terms.
But in a u-turn, it decided to sit out of the round on grounds that the fields were originally surrendered by it and it made no sense to bid for them again, company sources said.
Sarraf did not respond to calls and messages made for comments. OIL, which too had surrendered unviable fields, bid for as many as three fields albeit in consortia with companies likeHOEC, Prize Petroleum (upstream unit of HPCL), Oilmax Energy and IOC, the DGH data showed.
Smaller and lesser known companies like Gem Laboratories, Megha Engineering, Invenire Energy, Akhil Teja Natural Resources Ltd and Global Coal and Mining Pvt Ltd made up for bulk of the bids.
BP plc, the biggest foreign investor in the oil and gas sector in India as also Reliance Industries did not bid in the round that was also skipped by global energy giants like Exxon Mobil and Chevron.
Magna Energy too, the firm floated by maverick oil explorer Mike Watts who gave India its largest oilfield in Rajasthan, did not bid even though it was betting big on the country. Gujarat State Petroleum Corp (GSPC) too did not place any bid. While Oil Minister Dharmendra Pradhan travelled the globe- from Singapore to Houston – to get investors for the first oil field auction round in over four years, big giants sat out primarily due to small size of acreage being offered and the overheads required to bring them to production.
Launching the auction round in May, Pradhan had stated that Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) would be able to bid for the fields on offer.
But ONGC was reportedly asked not to bid as private and foreign investors thought they would not be able to compete with the might of state-owned firm with inside knowledge of the fields.
As many as 67 idle discoveries, primarily of ONGC, were clubbed to form 46 fields for offer in the so-called Discovered Small Field round, bids for which closed today.
Of these, 26 are on-land, 18 shallow water and 2 deepwater fields.
The fields hold an in-place reserves of 48 million tonnes of oil and over 38 billion cubic metres of gas reserves, worth Rs 70,000 crore at current prices.
Sources said the Government took away these discoveries from ONGC as it could not develop them because of small size and unviable price.
But in the bidding round, the Government is offering complete pricing freedom and liberal fiscal terms.
The fields offered included 28 discoveries in Mumbai offshore, 14 are in the prolific Krishna Godavari basin and 10 discoveries in the Assam shelf.
“The response to the DSF Bid Round has been overwhelming as compared to the last round of E&P auctions under the NELP regime in 2009-10, largely credited to the new policy reforms which have improved the ease of doing business by introducing a transparent and transparent regulatory framework,” said an Oil Ministry statement.
Despite smaller contract areas on offer in the DSF Bid Round, the response from private companies was overwhelming; around 37 private sector players submitted e-bids as against 27 private companies, during the NELP-IX, it said.
“The technical bid documents were opened in the presence of the all the bidders. The evaluation of the bids would be undertaken in a time bound manner and it is expected that the contract areas would be awarded expeditiously.
“The Government endeavours to award the contract areas at the earliest, so as to expedite the monetisation of the hydrocarbon production from these fields,” it added.The last exploration licensing round concluded in March 2012. That was the 9th round of bidding under New Exploration Licensing Policy (NELP). A total of 256 blocks were awarded in the nine rounds of NELP.
The discoveries were given up by the state run firms as late as 2012-13. In-place reserves in these identified discoveries/fields is about 88 million tons of oil and oil equivalent of gas.
Sources said the auction was done on a new revenue sharing model wherein bidders will be asked to quote the revenue they will share with the Government at low and high end of price and production band.

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