India approved awarding rights for 31 small discovered oil and gas fields in its first auction in six years, entrusting most of these to new entrants as it seeks to boost local production.
Sun Petrochemicals Pvt, a privately owned company formed by the directors of drugmaker Sun Pharmaceuticals Industries Ltd and engineering company Megha Engineering & Infrastructure Ltd, were among 15 new entrants out of 22 companies that have received rights to develop the fields, according to a government statement.
Established players, including Hindustan Oil Exploration Co and state-run Oil India Ltd, also won some fields.
Development of these small oil and gas fields is crucial for Indian Prime Minister Narendra Modi’s plan to reduce oil imports by as much as 10 percent by 2022.
The awarded blocks would boost India’s oil output by as much as 15,000 barrels a day and gas production by 2 million standard cubic meters a day, according to the Indian Directorate General of Hydrocarbons.
“These fields hold potential for lot of investments in India over the next decade,” Atanu Chakraborty, the head of the directorate, said in a telephone interview on Wednesday. “It will open new avenues for jobs and create entrepreneurs.”
The 46 fields that went under the hammer were discovered by Oil and Natural Gas Corp (ONGC) and state-run Oil India Ltd with estimated in-place oil and gas reserves of about 625 million barrels, or about 85 million tonnes. They were not developed as the explorers focused on bigger fields. Larger established companies like Reliance Industries Ltd and ONGC stayed away from the auctions.
“It is exciting that a lot of new players are coming — it’s very healthy for the industry,” Hindustan Oil Exploration managing director P. Elango said in a telephone interview. “It creates a new set of players in the market, which can fuel the next wave of growth in the industry.”
Hindustan Oil won two of the blocks in collaboration with other companies.
Elango said that a high number of new entrants in the sector will create opportunities for established companies to collaborate or offer consultancy services when these blocks are developed.
The government had received 134 bids from as many as 42 companies in the auction round that closed on Nov. 21 last year, after rules were relaxed allowing pricing freedom for oil and gas and uniform policy for all kinds of hydrocarbons.
Since the fields are small and presence of oil or gas is already established, production can be started quicker than other larger fields the country plans to auction later this year.
The estimated revenue from these blocks is seen at as much as 464 billion rupees (US$7 billion), according to the directorate.
India’s US$2 trillion economy imports more than 80 percent of its crude oil requirements. The government sees its heavy reliance on imports risking its status as one of the world’s fastest-growing major economies.
The International Energy Agency expects the country to be the fastest-growing crude oil consumer in the world through 2040.
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