India to hold biggest auction of oil, gas sites

NEW DELHI: India has announced the launch of its biggest-ever auction of oil and gas areas, brushing aside worries about a drop in spending by

firms on energy exploration due to the global financial crisis. The government expects to attract three billion dollars in commitments for exploration, a senior government official said late on Thursday. India is offering 70 blocks in the eighth round of the New Exploration Licensing Policy (NELP), Petroleum Secretary R.S. Pandey said. Some 24 deep-sea blocks, 28 shallow water blocks and 18 on-land blocks are up for grabs. New Delhi is also accepting bids for 10 areas for extraction of gas trapped in coal seams known as coal bed methane (CBM). India, which imports three quarters of its crude needs, has increased exploration of natural resources in a bid to ease its reliance on imports. The auction comes despite the worldwide economic slump and a fall in fuel prices, which has reduced exploration spending. Asked if the government was worried the economic slowdown would affect interest in the auction, Pandey said: "In our mind, the most effective antidote for the meltdown is the generation of economic activity." However, global spending on oil and gas exploration may drop 12 percent in 2009 to 400 billion dollars, Barclays Capital Research warned in a recent research note. India received bids for 45 of the 57 areas on offer in the seventh round last year when crude prices were near all-time highs. Bidding for the NELP-VIII and CBM rounds will close on August 10. Asia's third-largest energy consumer awarded a total of 203 oil and gas blocks in the previous seven rounds of NELP. More than 11 billion dollars has been committed for exploration so far. Previous rounds have been dominated by domestic firms, mainly the state-run Oil and Natural Gas Corp., but the government hopes to attract US oil companies into the bidding, Pandey said. Source: The Times of India