India aims to launch its next auction of oil and gas assets in the March quarter, Oil Minster Murli Deora said, and hopes falling exploration costs will trigger stronger interest from overseas outfits.
‘Upstream regulator V.K. Sibal said the next bidding round, India’s eigth under its New Exploration and Licencing Policy, would be the largest ever, and added the collapse in the price of crude had had a knock on effect on the cost of exploration. “It is a good opportunity for them (bidders) to get huge acreage at low, cheap prices in a competitive environment,” he Sibal said. BP’s exploration director for South Asia, Jonathan Evans, said seismic rates had almost halved over the last six months to $5000 per square kilometre, but rig rates were yet to fall. “We have started seeing seismic acquisition rates going down but rig rates have not changed. Seismic contracts are short-term and rig contracts are for two to three years.” An official at Reliance Industries , India’s leading private sector exploration and refining company, said rig rates were expected to drop next year in line with the fall in crude. Overseas bidders were lukewarm to India’s previous auction round, which closed in June when global crude prices were over $100 a barrel. But crude prices have since plummeted to under $40 a barrel. India received bids for 45 of 57 blocks in the previous round but signed contracts for just 41 as the federal cabinet did not allow the award of one block to lone bidder Cairn Energy while three winners have sought more time. “Contracts for the two blocks of GeoGlobal Resources and one awarded to Interlink will not be signed today. They have sought more time,” said S.K. Srivastava, deputy director general at the upstream regulator, the Directorate General of Hydrocarbons. At home, falling crude prices have pressured Oil and Natural Gas Corporation’s margins, and the government has responded with the promise of a new mechanism to ease the burden from compensating state-run fuel retailers by selling them cheap crude. “Oil prices have gone down so much that ability of oil upstream firms (to offer discounted crude) envisaged in June has gone down, so the oil companies asked us to look into it … the matter is under consideration,” said Oil Secretary R. S. Pandey. ONGC chairman R.S. Sharma said crude prices of $75 a barrel were reasonable levels at which upstream companies could keep investing and Ongc would review its spending plans if crude stays at current rates for a prolonged period, reported Reuters.