India launches bidding round, aims to develop discovered reserves

India’s petroleum ministry has launched the bidding round for discovered small oil and gas fields. The round launched on Wednesday in New Delhi aims to boost domestic oil and gas resources through the development of the existing hydrocarbon reserves.

The new bidding round was launched by Shri Dharmendra Pradhan, Minister of State (I/C) for Petroleum and Natural Gas

Discovered small fields are oil and gas blocks which have so far remained commercially undeveloped, but are now in focus as the central government seeks to boost domestic hydrocarbon production.

Under the announced ‘Discovered Small Fields Bid Round-2016’, 46 Contract Areas consisting of 67 different small fields are being offered to international investors, for exploration and production.

Bids are being invited for developing and monetizing these contract areas which are estimated to have 625 million barrels of oil and oil equivalent gas (O+OEG) in-place. These volumes are spread over 1500 square kilometers in onshore, shallow water and deepwater areas.

Speaking on the occasion, Shri Pradhan highlighted that India is now moving towards a new era of hydrocarbon production, driven by a forward looking Hydrocarbon Exploration and Licensing Policy (HELP); and a new fiscal model based on Revenue Sharing Contract. This new phase is a move ahead from the earlier NELP; and Production Sharing Contract regime and addresses various industry concerns that led to slowdown in investment over the last few years, the ministry said.

Single license for exploring all forms of hydrocarbons, graded system of royalty rates, pricing and marketing freedom for crude oil and natural gas, were some of the highlights of HELP mentioned by the Minister.Discovered fields to be offered with no upfront signature bonus (2)

He said that the Government is following principles of Enhancing Production, Attracting Investment, Generating Employment, Transparency, and Minimizing administrative discretion. Shri Pradhan said that a simpler and transparent administrative and fiscal system has been crated.

The ministry will hold roadshows  at different parts of the country and international venues to attract maximum interest of prospective bidders for the ‘Discovered Small Fields Bid Round-2016’, and to encourage industry players to participate in the bid process.

According to a recent report by the International Energy Agency, Indian energy demand is expected to grow by more than any other country in the period to 2040, propelled by an economy that grows to more than five-times its current size and by population growth that is expected to make it the world’s most populous country.

IEA projects that Indian energy consumption will more than double to 2040, accounting for 25% of the rise in global energy use to 2040, and the largest absolute growth in both coal and oil consumption.

Some highlights and features of India’s latest bidding round are: 

  • Single license to extract and exploit conventional and unconventional hydrocarbon fields
  • New fiscal regime based on revenue sharing model
  • Operational autonomy and flexibility for unit development in case of reservoirs extending beyond contract area or for joint development of common infrastructure
  • Exemption of Oil Cess and Custom duty
  • Full freedom for marketing and pricing for production from the awarded contract areas
  • Royalty in line with earlier New Exploration Licensing Policy (NELP)
  • Technical capability is not a pre-qualification criteria for bidding
  • Exploration allowed during entire contract period (20 years), which is mutually extendable for up to 10 years
  • No restriction on exploration activity during the contract period
  • Information Docket to be made available at e-bidding gateway
  • Physical Data Centers with Interpretation Facility would be set up in India and various others international locations where prospective bidders can access data
  • User-friendly e-bidding Portal and interactive video for easy navigation to be made available to bidders.
  • Discovered fields to be offered with no upfront signature bonus