10 Apr 2009,
NEW DELHI: The government does not see the present global economic slowdown affecting response to its eighth round of exploration acreage auction.
The biggest offering so far, launched on Thursday, has listed 70 concessions — 30% of them recycled with improved data — that are expected to get commitments of $3 billion investment. Bidding will close on August 10.
"In our mind, the most effective antidote for meltdown is generation of economic activity. Economic meltdown will not last for ever, maybe six or 12 months. The bids will be finalised in 6-9 months by which time the world will enter a better phase," petroleum secretary R S Pandey said after launching the auction.
Exploration regulator V K Sibal said, "This is the best time to get exploration assets. It will be available more easily. So, I think medium to aggressive bidding will be there." According to him, Reliance Industries' Andhra offshore field was just the tip of the iceberg and more surprises were in store on the east coast.
But there are some policy issues that may dampen enthusiasm among foreign bidders. The finance ministry has withdrawn a seven-year income tax holiday on gas production from auctioned fields, while it remains intact for crude. Besides, the government identifying buyers as well as setting the price for gas from such fields instead of letting the market decide that also may prove to be a dampener. Barclays Capital Research has said spending on exploration could drop 12% in 2009 to $400 billion globally.
Pandey said technical capability will not be a qualifying criteria for the 10 small onland blocks while for deepwater areas, higher points have been assigned to companies having deepwater experience. "We are offering 24 deep-sea blocks, 28 shallow water blocks and 18 onland blocks for bidding," Pandey said. Ten acreages were put on offer to tap gas trapped in layers of coal.
After seven rounds of auctions, the area under exploration has increased more than four times to 48% of the total Indian sedimentary basin from 11% before the system of auctions started in 1999. Since then, 68 oil and gas discoveries have been reported, leading to an accrual of over 600 million tonnes of reserves and $11 billion commitment in exploration spend.
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