Global uncertainties, rising crude keep private bids in OALP VII round low

New Delhi [India], February 18 : Global uncertainties and the rising price of crude oil may have kept private participation low in the seventh bid round of Open Acreage Licensing Policy (OALP), bids for which closed on February 15.
The OALP bid Round-VII was dominated by state-run oil and gas companies including Oil and Natural Gas Corporation (ONGC) which was among the mere four entities which have put in bids for the eight oil and gas blocks on offer in the seventh bid round of OALP bid Round-VII launched on December 16, 2021. The Government offered eight blocks for exploration and development through international competitive bidding. The OALP Round VII is expected to generate an immediate exploration work commitment of around USD 300-400 million, according to the Ministry of Petroleum and Natural Gas.
In this round, while only one participant is a private company, there are no global names in the fray for the eight blocks. According to the Directorate General of Hydrocarbons (DGH), six out of the eight blocks on offer got single bids while there were two bidders for the remaining area, DGH said in a summary of bids received on blocks.
"We have offered our bids. ONGC has bid for 5 of the 8 blocks on offer," a source close to the development told ANI. The oil and gas major was the sole bidder in three of the blocks and had Sun Petrochemicals for competition in two others, according to DGH. Oil India was the only bidder for the two blocks it made an offer for and GAIL was sole bidder for the lone block on offer from Rajasthan.
According to Arun Kejriwal Founder of Kejriwal Research and Advisory Services, all the big PSUs who placed bids have enormous expertise in oil and gas exploration, hence their presence is in itself significant. The PSU giants also have well spread out international assets and presence in oil and gas exploration.
"It could also be that global uncertainties have kept away a larger private interest. Moreover, with oil nearing USD 100/barrel, many companies may have thought it prudent to spread out assets rather than investing in new ones," Kejriwal told ANI. The government has not yet announced the winners of OALP-VI.
The scant private participation belies the Government expectation that opening up more acreage for exploration will help boost India's oil and gas production and contribute in reducing the oil import bill. This is despite policy reforms which also shifted the focus from revenue to production maximisation with a continued focus on greater transparency and streamlined procedures.
The OALP-VI round too also saw the same pattern with just three bidders, two being ONGC and OIL. Out of the 21 blocks or areas that were offered for exploration and production of oil and gas, in OALP-VI, 18 got single bids and ONGC, India's largest oil producer, was the sole bidder for 16 blocks. Sun Petrochemicals was the sole exception as a private bidder in that round.
The eight blocks offered in the current OALP-VII spread across six sedimentary basins and 5 states covering 15,766 square kilometre area. While five blocks are onland type, two are shallow water-type and one block is ultra deep-water type. A successful award of the Round-VII blocks, likely be completed by the end of March 2022, would further increase the cumulative acreage under OALP of 207,692 sq. km.