The government's ambitious plan to attract investment into deepwater oil and gas exploration is yet to generate a strong response from investors, with the Centre extending bidding deadlines for two rounds of exploration blocks once again.
The Directorate General of Hydrocarbons (DGH) has extended the bidding deadline for the Open Acreage Licensing Policy (OALP) rounds X and XI to December 10, giving prospective investors more time to evaluate the blocks and the incentives on offer.
The latest extension marks the seventh time the deadline for OALP-X has been pushed back, while OALP-XI has received its third extension. The repeated postponements come despite the government's announcement of a substantial financial support package aimed at reducing the cost and risks associated with offshore exploration.
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In July, the Cabinet approved incentives worth Rs 84,084 crore under the Samudra Manthan scheme to encourage exploration in India's deepwater and ultra-deepwater regions.
Under the scheme, the government will provide financial assistance of up to 50% of drilling costs, subject to a maximum support of Rs 675 crore for each deepwater exploratory well.
The programme envisages drilling 60 deepwater exploration wells, with the government seeking to encourage companies to undertake exploration in areas where high upfront costs and geological uncertainties can make investments challenging.
The financial commitment is significant given the cost of offshore exploration. A single deepwater exploratory well can cost between $125 million and $150 million, making drilling a capital-intensive exercise for companies.
The proposed government support is intended to lower the financial burden on investors and improve the economics of exploration projects. However, the repeated extensions of bidding deadlines suggest that the incentives have not yet translated into a strong bidding response.
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The December 10 deadline now gives companies additional time to assess the available acreage, evaluate exploration prospects and consider the financial support being offered before submitting their bids.
India has been looking to increase domestic oil and gas exploration as part of its broader effort to strengthen energy security and reduce dependence on imports. Attracting private and international investment into offshore exploration remains an important part of that strategy.
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