A successful auction of the small oil and gas fields is seen as crucial to a recently announced hydrocarbon policy, which India hopes will unlock energy resources worth $40 billion by simplifying rules and offering pricing incentives.
The world’s fourth-biggest oil and gas consumer imports nearly three-quarters of its energy requirements, but Prime Minister Narendra Modi has set a target of cutting its fuel import dependency to two-thirds by 2022 and to half by 2030.
Government is auctioning a total of 46 oil and gas fields, the oil ministry said, with 26 on land, 18 offshore in shallow water and two in deep water.
The deadline for submitting the bids is on October 31, with companies free to try for more than one exploration block.
The mostly small, marginal discoveries on offer were originally controlled by two state-owned exploration companies, Oil and Natural Gas Corporation and Oil India Ltd. The fields have remained undeveloped for years due to their small size and the high cost of development.
The current low crude oil prices – now around $48 a barrel – will also likely make it hard for the government to attract bids for the fields.
Some exploration consultants have also criticised the revenue-sharing model being used by India as most countries auction oil and gas blocks based on a cost-recovery model.
In a revenue-sharing model a company operating an oil and gas field has to share revenue from any sales with the government from first production. In a cost-recovery model a company starts sharing income with the government only once its exploration and development costs have been covered.