NEW DELHI (Dow Jones Newswires), Feb. 25, 2009
The global economic slowdown and a sharp drop in crude oil prices may force India to split its annual licensing round of exploration acreage, Petroleum Secretary R.S. Pandey said Wednesday.
India plans to launch its largest ever auctions of oil and gas blocks by mid-April, Pandey said. It may also offer fewer blocks initially to test investor sentiment.
"We may launch it in one or more phases, a few blocks now and few later, to first see the interest in the market because of the current international financial situation," he said.
Crude oil has fallen more than $100 a barrel since hitting a peak above $147 a barrel last July as the global economic slowdown reduced demand for oil.
Facing a possible cut in spending by global oil companies because of lower crude prices and the credit crunch, India "will first have to test the waters" to check investor sentiment, Pandey said.
India imports about three quarters of its annual crude oil requirement and is stepping up exploration to raise local production to curb dependence on overseas shipments.
Last year, it awarded 44 oil and gas blocks to bidders in the seventh round of auctions under the New Exploration Licensing Policy.
"We've thought that more blocks will be ready to be offered this time," Pandey said. India is aiming for coverage of 80% of its sedimentary basin by 2012.
The government may also invites bids around the same time for exploration to extract gas from coal seams, known as coal-bed methane.
The Petroleum Ministry is also talking with the Finance Ministry to restore tax incentives for gas exploration. The provision for a seven-year tax exemption for gas producers was removed early last year by the government.
"We're in touch with the Finance Ministry, hopefully the tax issue on gas should be resolved soon," he said.
Copyright (c) 2009 Dow Jones & Company, Inc.
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