Global energy giants opt out of auctions

New Delhi: Global energy giants Exxon Mobil, Chevron and BP plc as well as domestic players like Reliance Industries are unlikely to bid in the auction of 46 discovered small oil and gas fields that closes on Monday.

While Oil Minister Dharmendra Pradhan travelled the globe -from Singapore to Houston, to get investors for the first oil field auction round in over four years, big giants are likely to opt out primarily due to small size of acreage being offered and the overheads require to bring them to production.

Bids for the auction closes today and may see only companies like the state-owned ONGC and Oil India, Gujarat government owned-firm GSPC and some smaller players like HOEC bidding, multiple industry sources and officials said.

Most companies had raised concerns about the size of the blocks or fields on offer. They say 10 square kilometer offering, one-tenth of the smallest block ever offered in the previous bid rounds, is too small.

The small size of the offering places prohibitive operational costs on big companies and such fields are viable only for small players with one-rig operation, they said.

Magna Energy, the firm floated by maverick oil explorer Mike Watts who gave India its largest oilfield in Rajasthan, too is not likely to bid even though it was betting big on the country.

Sources said the government should have ideally clubbed two or more fields into a single unit to improve bidding prospects. Also, data on reserves in the fields and their extension beyond the block boundaries were also found to be inadequate.

Previously, the last date of bidding for the Discovered Small Field Bid Round was October 31 but was extended to November 21.

DGH chief Atanu Chakraborty in a presentation on the bid round said 67 discovered fields are being offered under 46 contract areas. Of these, 26 are on-land, 18 shallow water and 2 deepest fields.

The fields hold an in-place reserves of 48 million tonnes of oil (17.85 mt in on-land blocks and 30.19 mt on offshore blocks) and over 38 billion cubic metres of gas reserves (7.20 bcm in on-land blocks  and 31.18 bcm in offshore areas).