India Extends Bid Deadline For Oil, Gas Blocks

NEW DELHI, April 18, 2008 (Dow Jones Newswires)

India's federal government has again extended the deadline for submission of bids for the ongoing auctions of its oil and gas blocks to May 16 from April 25, a senior government official said Friday.

This is the second time the government has extended the last date for bids for its largest-ever auction of oil and gas blocks. The original deadline announced during the December launch of the auction was April 11.

The extension is due to confusion over the government's budget proposal to withdraw tax incentives for oil and gas producers in the country, said V.K. Sibal, director of upstream regulator Directorate-General of Hydrocarbons.

"That's why it's being done; to get some clarity on the tax break issue," Sibal told Dow Jones Newswires.

The government had introduced tax incentives to encourage exploration and production in the country to reduce its dependence on costly oil imports, which currently meet about three fourths of its crude oil demand.

Finance Minister P. Chidambaram had proposed withdrawal of the incentives when he presented the country's annual budget earlier this year.

The government may now restore the tax incentives, Sibal said. "Most probably, the decision will be in favor of the operators."

Last month, R.S. Sharma, chairman of India's largest oil producer Oil & Natural Gas Corp. (500312.BY), said rollback of the tax incentives might hurt investor sentiment.

The country, which raked in investment commitments of $8 billion for exploration in the previous six rounds of auctions under its New Exploration Licensing Policy, is expecting at least $3.5 billion for the latest round.

NEW DELHI, April 18, 2008 (Dow Jones Newswires)