Investments totalling $40 billion will come into the Indian oil and gas exploration and production sector in the next 4-5 years, said Dharmendra Pradhan, Union Minister for Petroleum and Natural Gas, here at a roadshow to drum up interest in oil fields that will be put up for bidding in December.
The new hydrocarbon policy has already received investment commitment of $25 billion, he added. “Under the open acreage licensing (OAL) policy, $5-6 billion is expected to come into exploration and $20-30 billion in development work,” Pradhan said.
The Minister met executives of firms in the energy sector and private equity players here to encourage them to bid for energy blocks under the new Hydrocarbon Exploration and Licensing Policy, under which the government will agree to a revenue-sharing structure with the operator and give the operator marketing and pricing freedom in oil and natural gas.
OAL permits investors to choose exploration areas of choice and submit expressions of interest.
Till now, 51 such expressions have been submitted across nine sedimentary basins. Bidding shall commence in January 2018 for expressions received till November.
The EOI and bidding cycle will be repeated every six months under the new hydrocarbon policy.
Pradhan said the Ministry still plans to set up a gas trading hub that will help in transparent price discovery of natural gas for sale industrial users, like in power and steel.
“We will make an exception for the fertiliser industry and for home users of gas, who use compressed or piped natural gas. The government does not want to be in the business of price administration. We will submit a proposal to the government on the gas trading hub. I think this has the potential to be a benchmark, like the Henry Hub in the US.”
Pradhan recently signed a memorandum of cooperation with the Japanese government to seek synergies in sourcing, transportation, exchange and pricing of natural gas. India and Japan together account for 40 per cent of global consumption of liquified natural gas.