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No takers for coal-bed methane blocks under open acreage licensing policy

Saurabh Kumar

While the ministry of petroleum and natural gas has recommended to the empowered committee of secretaries (ECS) names of top bidders for 32 hydrocarbon blocks under Open Acreage Licensing Policy (OALP) rounds II and III, there seems to be no takers for coal-bed methane blocks.

There were eight onland, five shallow water and one ultra-deepwater blocks under auction for OALP-II, a total of 14. Under OALP-III, out of the 23 blocks, 19 are onland (including five coal-bed methane), three in shallow water and one in deepwater. No bids were received for five blocks under round III.

Bids came in for 32 blocks out of the 37, but none for the CBM blocks which were carved out by the Directorate General of Hydrocarbons and put up for auction.

Investors seem to be worried about the evacuation of the gas as there are few avenues to sell. Maybe once city gas distribution networks come up, explorers will show interest, said a government official. The CBM blocks are in the eastern part of India where ONGC, Great Eastern Energy Corporation, and Essar Oil & Gas already have blocks.

While Reliance Industries, along with its foreign partner BP, is set to get a hydrocarbon field after a gap of 11 years as it last won in 2008 under New Exploration Licensing Policy, the ministry has also recommended two fields for which single bids were received.

State-run Oil India has won 12 blocks under the two rounds, followed by Vedanta (10), ONGC (8) and Indian Oil Corporation (1) under OALP II and III.

Once the ECS clears the recommendations, it will have to be cleared by the petroleum minister and the finance minister. In April, 2018, the Cabinet Committee on Economic Affairs (CCEA) had given them the power to award oil and gas exploration blocks to successful bidders under HELP after getting recommendations from the ECS, a move to fast-track the process. Earlier, awarding of blocks required the CCEA s approval. ECS comprises secretaries of economic affairs, revenue, expenditure, law and petroleum.

Vedanta, operator of the prolific Barmer field in Rajasthan, bagged 41 out of the 55 hydrocarbon blocks offered under the OALP-I, a critical part of the March 2016-launched Hydrocarbon Exploration Licensing Policy (HELP).

HELP s hallmarks are single licence for exploration of all forms of hydrocarbons (including shale gas and CBM), a simple revenue-sharing model and marketing and pricing freedom for the developers.

Under HELP, blocks are awarded to companies that offer the highest share of revenue to the government.