NELP-IX: RIL bids for 6,ONGC 29 blocks

State gas utility GAIL India and the upstream subsidiary of state-owned Bharat Petroleum bid for four blocks.

Reliance Industries made a big departure from previous rounds by bidding for six blocks — two deepsea areas in the Andaman Basin in the Bay of Bengal and four onshore blocks in Rajasthan and Gujarat.

Cairn India,whose success in Rajasthan may have prompted Reliance to bid for two blocks in the state,submitted offers for only two blocks — one onland and one offshore. Cairn has not bid for any two exploration blocks on offer in Rajasthan.

The only other notable bidder was UK’s BG Group,which teamed up with BHP Billiton to bid for a deep-water block in the Mumbai basin,off the West Coast. Essar Oil bid for one onland block in the Cambay Basin.

“The response to this 9th round (of auction) under NELP has been more than satisfactory. It has been encouraging,” Oil Minister S Jaipal Reddy told reporters after the close of bidding for the 34 blocks offered in NELP-IX here today.

Reddy rejected arguments that regulatory troubles with London-listed mining group Vedanta Resources’ buyout of Cairn India sent negative signals to investors.

“We have not taken a negative view of (to the USD 9.6 billion transaction),nor a positive view… we have maintained absolute neutrality,” he said.

Vedanta had in August last year announced buying out of Edinburgh-based Cairn Energy Plc’s majority stake in Cairn India,but the deal is yet to get a government approval.

Reddy said foreign investors stayed away not because of any policy of the government.

“We have put in place a very transparent policy. Full justice is being done to foreign companies. It is not for want of inviting atmosphere in India that they did not bid,” he said,adding the blocks would be awarded and Production Sharing Contracts (PSC) will be signed in four months.

ONGC and OIL teamed up to bid for 15 blocks together,while North East-focused OIL bid for two blocks on its own as operator.

Of the 33 blocks that got bids,14 areas received single bid. ONGC and its partners were the sole bidder in 10 blocks.

OIL and its partners were sole bidder for one Mumbai offshore shallow water block. Bids for the 34 oil and gas blocks,which include eight in deepwater areas,seven in shallow water and 19 onshore properties,close today.

Reliance,which had not bid for any block in the previous NELP-VIII round in 2009,has shown an interest in onland blocks in Rajasthan,apparently swayed by the huge oil finds by Cairn India.

The Mangala oilfield in Cairn India’s prolific RJ-ON-90/1 block in the Thar desert of Rajasthan is currently producing 125,000 barrels per day and the entire area,where Cairn has made a number of oil discoveries,has the potential to produce up to 300,000 bpd (15 million tonnes a year).

India had got an investment commitment of USD 1.1 billion in NELP-VIII and it is expecting to better that.

The most sought after block was a Cambay Basin onland block in Gujarat,which got six bids,including from Reliance,Essar Oil,ONGC-OIL-HPCL and a GAIL-Bharat PetroResources-EIL-Bharat Forge consortium.

Three blocks — one in the onland Cambay Basin and two in Rajasthan — got five bids each.

Industry sources said Cairn,which is known to have a knack for making discoveries in areas often abandoned by energy giants,has little interest in NELP-IX as many of the blocks on offer are old and recycled (areas where some or the other company had previously done exploration but had abandoned them as they did not find any or very little hydrocarbons).

Out of 34 blocks,19 blocks are totally new areas seven in deep sea,two in shallow water and 10 onland blocks.

The remaining 15 (1 in deep water,5 in shallow water and 9 onland blocks) are recycled blocks.

Of the recycled blocks,five are discards of state-owned Oil and Natural Gas Corp (ONGC),the largest bidder in the previous eight rounds of NELP. ONGC relinquished the areas it had won in first and second round of NELP after it made no discovery.

In the eight rounds of NELP since 1999,235 blocks have been awarded till date. This has resulted in enhancement of exploration coverage from 11 per cent to about 58 per cent of the total Indian sedimentary basin area between 2000 and 2010.

The discoveries made under NELP have resulted in in-place hydrocarbon reserves accretion of a staggering 642 million tonnes of oil and oil equivalent gas,the DGH source said.

A total of 87 oil and gas discoveries have been made in 26 blocks under NELP during this period. The discoveries have added over 640 million tonnes of oil equivalent reserves.

In the first eight rounds of NELP,a USD 11.1 billion investment was committed,but the actual investment so far has been USD 14.3 billion.

The blocks offered under NELP-IX include eight deep-sea,seven shallow water and 19 onland acreages. The onland blocks include eight small blocks,for which the technical expertise of companies is not a criteria for evaluation of offers and award of blocks.

These 34 blocks cover a sedimentary area of about 88,807 square kilometres,which is 2.9 per cent of the Indian sedimentary basin area.

The onland blocks fall in Assam (2),Gujarat (11),Rajasthan (2),Madhya Pradesh (2),Tripura (1) and Uttar Pradesh (1). The seven shallow water and eight deep water blocks are off the East and West Coast,but no area in the prolific Krishna-Godavari basin is on offer.

Out of 87 oil and gas discoveries made in the NELP rounds,natural gas production in Reliance Industries eastern offshore KG-D6 block commenced from April,2009.

The 8th round,which closed on October 12,2009,attracted an investment commitment of USD 1.34 billion for 36 blocks that received offers. Under NELP-VIII,70 areas or blocks for exploration were offered,the biggest licensing round in India.

Of the 36 areas bid for,the government had awarded 33 blocks to successful bidders.

The government has hired UK-based Fugro Data Solutions Ltd to market the blocks in NELP-IX.