India Opens Largest Oil, Gas Block Bid Round

India has launched its largest oil and gas bid round, offering 25 blocks spanning 1.91 lakh square kilometers, primarily in offshore areas on Tuesday. This move aims to boost domestic production, reduce imports, and enhance energy security.

Petroleum Minister Hardeep Singh Puri introduced the 10th bid round under the Open Acreage Licensing Policy at the India Energy Week.

The OALP-X round features 25 blocks across 13 sedimentary basins, with 13 blocks located in offshore areas. In comparison, the previous nine rounds offered a total area of 3.78 lakh square kilometers, with the last bid round, OALP-IX, being the largest until now, covering 1.36 lakh square kilometers.

This bid round is significant, as India seeks to increase domestic production and reduce its reliance on imports. The government hopes to attract foreign investment, particularly after introducing the Oilfields (Regulation and Development) Amendment Bill, 2024, which simplifies the business regime and streamlines approval processes.

OALP-IX in September attracted four bidders that included state-owned Oil and Natural Gas Corp. and Oil India Ltd. and private sector player Vedanta Ltd., with most blocks getting just two bids, according to the Directorate General of Hydrocarbons. It also for the first time saw Reliance Industries Ltd-BP Plc bidding together, with ONGC, for one block in Gujarat offshore.

Reliance and its supermajor partner BP had bid in just two of the past eight oil and gas bid rounds since 2017.

Reliance-BP, combined, had bid and won the two blocks they had bid for in the previous rounds and in OALP-IX they teamed up with ONGC for the first time to bid for a shallow water block in the Gujarat-Saurashtra basin.

The government is yet to award OALP-IX blocks to winners.

In OALP-IX, ONGC bid for 14 blocks alone and with partners such as state-owned Oil India and Indian Oil Corp. for four other blocks.

After considering its bid with Reliance-BP, ONGC in all bids for 19 out of the 28 blocks on offer.

Mining billionaire Anil Agarwal-owned Vedanta bid for all the 28 blocks on offer, while Sun Petrochemicals bid for seven areas.

Of the 28 blocks on offer, four blocks got three bids each, while the rest had two bidders, one being Vedanta Ltd.

Blocks are awarded to firms offering the highest share of revenues generated from oil and gas produced from the blocks and the work programme they commit to.

The 28 blocks offered in OALP-IX, including nine onshore blocks, eight shallow-water blocks and 11 ultra-deepwater blocks across eight sedimentary basins, covered an area of 136,596.45 sq km. In the previous eight OALP rounds, 144 exploration and production blocks comprising a total area of 242,055 sq km have been awarded.

In the last round where 10 blocks were offered, state-owned ONGC won seven blocks, while a private sector consortium of Reliance Industries and BP, Oil India and private sector Sun Petrochemicals received one block each.

The government introduced the OALP in 2017 to attract oil and gas firms to develop India's upstream sector.

The OALP guarantees marketing and pricing freedom, with a revenue-sharing model, apart from offering reduced royalty rates.

Reliance and BP have more than a decade-old partnership and are partners in KG deepsea block KG-DWN-98/3 or KG-D6, from where they produce about 30 million standard cubic metres per day of gas.

The government has been hoping that opening up more acreage for exploration will help boost India's oil and gas production, helping cut down the $222 billion oil import bill.

In 2016, it brought in an open acreage policy, which moved away from the previous practice of government identifying and bidding out blocks to the one under which explorers were allowed the freedom to identify any area, outside of the ones that are already with some company or other, for prospecting of oil and gas.

The areas identified are to be clubbed twice a year and offered for bidding.

The firm identifying the area gets a 5-point advantage.

Vedanta walked away with 41 blocks out of the 55 blocks on offer in the very first round and got another 10 areas in two subsequent rounds.

Other rounds have been dominated by state-owned firms.

(With inputs from PTI).