Vedanta bags 41 blocks under India’s first mega oil & gas auction

Vedanta has won exploration licenses for 41 of the 55 oil and gas blocks auctioned in the first round of the open acreage licensing policy, with state-run Oil and Natural Gas Corp winning barely two.

Oil India, another state-run oil producer much smaller than ONGC in revenue, managed to win nine blocks while GAIL, Bharat Petroresources and Hindustan Oil Exploration (HOEC) won one block each. The Directorate General of Hydrocarbons (DGH) announced the results on Tuesday.

Vedanta had bid for all the 55 blocks on offer and won three-fourths of them, a spectacular success ratio. ONGC had placed bid for 37 blocks but won just two. Oil India competed for 23 blocks in the auction in which a total of 110 bids were received. No foreign player participated in the auction that closed in early May. Domestic heavyweight Reliance Industries too kept out.

ONGC, the most experienced oil and gas player in the country, showed extraordinary risk-aversion and placed conservative bids, losing out to an aggressive Vedanta. This also earned ONGC executives a reprimand from the government.

The auction was the first test of the new Hydrocarbon Exploration Licensing Policy (HELP), which gave companies the liberty to carve their own blocks, introduced revenue-sharing model and gave operators the freedom to market natural gas.

Under the policy, companies can express interest in specific blocks round the year. The government aggregates these interests over six months and then put these blocks up for auction.

These oilfield auctions are important for India to raise its domestic output of oil and gas, and cut its dependence on imports. India currently imports nearly 84% of crude and nearly half of its natural gas requirement. The government has set a target of cutting oil imports to 67% of the country’s requirement by 2022.