International oil companies have stayed away from the three auction rounds held during the last three years that awarded exploration areas to companies that offered the biggest share of the revenue from oil and gas produced. (Photo: Representational)

New Delhi: India's overhauled policy for finding oil and gas is unlikely to be a game-changer as globally exploration budgets have shrunk and the country's prospects are weaker than other regions, natural resources consultancy Wood Mackenzie said on Wednesday.

The Union Cabinet in February had approved a policy for awarding acreage, based primarily on exploration work commitment such as drilling of wells. This was aimed at attracting the elusive private and foreign investment to raise domestic output.

International oil companies have stayed away from the three auction rounds held during the last three years that awarded exploration areas to companies that offered the biggest share of the revenue from oil and gas produced.

Contracts for the 32 blocks or areas won by state-owned Oil India Ltd (OIL) and Oil and Natural Gas Corp (ONGC) and private sector Vedanta Ltd in the latest auction were signed on Tuesday.

"In some ways, this marks the end of the first phase of the Open Acreage Licensing Policy (OALP) era. The government has improved the fiscal parameters for blocks that will be available starting with OALP-4," Wood Mackenzie said in its comments on the contract signing.

The change, it said, was "in response to the lack of international oil company participation so far and a potential flaw in the original revenue sharing mechanism."

In the overhauled policy, more importance has been given to work programmes rather than revenue shared with the government, it said.

"These changes will move the needle but are unlikely to be game-changers as globally exploration budgets have shrunk and competition is fierce. India's prospectivity pales in comparison to opportunities available in many other regions," it added.

The overhauled oil and gas exploration licensing policy will be implemented from the 4th bid round of OALP, likely by this month or August.

The new policy promises complete marketing and pricing freedom for oil and gas.

Blocks in category-I sedimentary basis such as Krishna Godavari, Mumbai Offshore, Rajasthan or Assam where commercial production has already been established, will be bid out on 70:30 work programme-revenue share ratio (70 per cent weightage to work programme and 30 per cent share of revenue to the government).

Blocks in less explored category-II and III basins will be bid out solely on exploration work commitment basis.

In the just-concluded OALP bid round, OIL walked away with 12 blocks, Vedanta got 10 and ONGC bagged 8.

"Oil India has ventured out of its core areas of Assam and Rajasthan. The company has picked up blocks in the onshore Mahanadi and offshore Andaman basins. ONGC has also re-entered the deepwater Mahanadi basin. Both companies are under severe pressure to increase exploration and boost output," Wood Mackenzie said.

Vedanta, which won 41 blocks during OALP-1, has further consolidated its position as the country's largest private E&P player, it said. "Replenishing and diversifying the portfolio beyond the RJ-0N-90/1 Rajasthan block is vital for meeting the company's production goal of 500,000 barrels of oil and oil equivalent gas per day."

The target is nearly double of the company's current output.

"This also marks Reliance's maiden foray in the OALP regime. It has won an ultra-deepwater block located adjacent to its KG-D6 block in the Krishna-Godavari basin," Wood Mackenzie added.