Global majors keen on India's new exploration blocks

Global majors keen on India's new exploration blocks

NewKerala, New Delhi

12th April 2006

Prospects of more oil and gas finds in India have aroused considerable enthusiasm among global energy majors about new exploration blocks being offered in the country, Petroleum Minister Murli Deora said here Tuesday.

Back from a road show abroad to promote 55 exploration blocks offered for bidding under the latest New Exploration Licensing Policy (NELP) -VI round, Deora expressed optimism that global energy majors like Chevron and ExxonMobil would bid singly or jointly with other companies.

"For the first time all major oil companies including Chevron and ExxonMobil have expressed interest in acquiring data packages of India's sedimentary basins," said Deora.

"Given that over Rs.400 million worth of data have already been sold to companies worldwide, we are optimistic of achieving a milestone of Rs.1 billion through sale of data," the minister said.

During the NELP-V round, which concluded in December last with the award and signing of product sharing contracts for 25 exploration blocks, the Directorate General of Hydrocarbon (DGH) had sold data worth Rs.200 million, which has already been surpassed.

In fact, some global majors are already in the country to study investment opportunities including in green-field refinery projects, said Petroleum Secretary M.S. Srinivasan.

Declining to disclose the companies, Srinivasan said that following the road show in London, some of the companies were in India to study investment opportunities including in the upcoming Bina Refinery in Madhya Pradesh.

Gas and oil discoveries in the last five years and India's investor-friendly rules have led to the increasing keenness of energy majors to invest in Indian exploration activities.

"In the last five years we have been able to add 650 million tonnes of oil and oil equivalent gas (O+OEG) to our in-place reserves. Out of this we should be able to recover about 50 percent of the reserves. On a conservative basis we should be able to recover at least 30 percent or 250 million tonnes O+OEG," said Srinivasan.

Most of the new finds in India had yielded gas reserves, he said.

In the NELP-VI, with majority of the blocks being offshore India expects to see investments of over $7 billion in the next 24 months of exploration activities, which is sizeably more than about $1.7-2 billion investment flow expected in the NELP-V, the official said.

In addition, India has found encouraging reserves from blocks awarded for exploration of coalbed methane.

"From next year, our first commercial production of coal-bed methane is set to begin and yield 20 million cubic metres per day of methane gas which is about 3.5 million tonnes of oil equivalent," said Srinivasan.

Because of the low pressure of coal-bed methane, it is expected to be utilised locally, the official said.

Being a greenhouse gas, believed to be responsible for climate changes, Srinivasan said the petroleum ministry was working with the coal ministry to formulate new guidelines on the basis of rules in various countries where extraction of coal-bed methane prior to mining of coal is mandatory.

The rich potential for coal-bed methane in India saw considerable interest in the new exploration blocks being offered in the latest round for which Minister of State for Petroleum and Natural Gas Dinsha Patel had led a road show to Australia.