Petroleum minister Dharmendra Pradhan has sent a clear message to British investors that India will work “proactively” to make it easier for them to develop its oil and gas reserves. IndiaGBnews reports
Pradhan made the assurance to investors in London during a UK visit that is part of a global drive by the Indian government to attract foreign investment into its discovered small oil and gas fields.
Another aim of his roadtrip is to highlight the on-going hydrocarbon sector reforms in India.
Under its ‘Discovered Small Field Policy’ the Indian government is open for bids for 67 offshore and onshore fields, with oil and gas reserves of 625 million barrels.
Pradhan was scheduled to have one-to-one meetings with prospective bidders, officials at UK Trade and Investment and representatives from the commodities markets.
Meetings are also planned with UK energy minister Greg Clark and his Scottish counterpart Paul Wheelhouse in Aberdeen.
India’s Petroleum Ministry, along with the Directorate General of Hydrocarbon (DGH), has organised a series of interactive roadshows this month both in Singapore and the UK.
A DGH spokesman said: “During the meetings, Pradhan is expected to highlight the paradigm shift in the policy regime for the exploration and production sector in India and the improved investment environment for E&P (exploration and production) companies under the new Hydrocarbon Exploration Licensing Policy which emphasises on improving the ease of doing business and operational autonomy to attract investment.”
Eventual operators will be issued a single licence for the exploration of conventional and non-conventional hydrocarbons and will have the freedom to sell oil and gas at “arms-length” market prices. There would be no cess (tax) on crude oil.
Of the 46 small fields discovered, 26 are on land, 18 are offshore in shallow water and two are in deep water – 28 are off the coast of Mumbai, with 14 others in the east coast’s Krishna-Godavari basin.
At the event, director general of hydrocarbons Atanu Chakraborty also elaborated on the changes made to India’s oil and gas exploration regime.
It is reported that bidding will be open until October 31. The previous exploration licensing round ended in March 2012.
The auction will be under the new Hydrocarbon Exploration and Licensing Policy (HELP) approved in March, based on a revenue-sharing model as opposed to an earlier cost-and-output-based deal.
The new model will replace the controversial production sharing contracts — where oil and gas blocks are awarded to firms that show they will do maximum work on a block.That method has governed the bidding under nine previous rounds.
The production sharing contracts regime, which allows operators to recover all investments made from sale of oil and gas before profits are shared with the government, has been criticised by India’s official auditor. .
It said the policy encouraged companies to keep inflating costs — “gold plating” — in order to postpone giving a higher share of profits.
This summer India took its road shows to the USA and Canada.
The change is designed to benefit the government if there is a windfall from any steep rise in oil prices and a quantum leap in production.