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Disquieting fallout

Under the shadow of the global crisis, the latest New Exploration Licensing Policy (NELP) bidding round has evoked a disappointing response, despite the official claim that the performance compares favourably with the experience of other countries. Only 36 of the 70 blocks on offer received bids. The response was slightly better for the auction for Coal Bed Methane (CBM IV) round. The numbers however tell only part of the story. The bidding was partly salvaged by the public sector oil giant Oil and Natural Gas Commission, which bagged 17 bids, was the star of the show. The ONGC might have felt obliged to underwrite a major part of NELP-VIII but in the absence of serious competition it could have also made commercial sense to pick up acreages at very attractive prices.

India’s biggest private sector petroleum company, Reliance Industries (RIL) was conspicuously absent in the oil and gas bids. The company has just commenced production of natural gas from a block in the KG basin it was awarded earlier this decade. RIL’s gas venture and the successful exploitation of an on-land oil field in Rajasthan are the two success stories of the exploration policies. Yet, far from being a showpiece, the gas sector has in the recent period shown up the official policy in a bad light. The major lacunae in the ways NELP is interpreted have been exposed. As it is, large multinationals such as Shell, Exxon Mobil, and Chevron have kept away from the bidding. Recent developments, including the reinforced perceptions of flawed governance in the sector, will dampen the interest of international oil companies further.

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