Indian energy is poised to attract US$300 billion in foreign investment over a decade – Oil Minister

India’s energy sector is expected to attract foreign investments worth more than US$300 billion in the coming decade, minister for petroleum and natural gas Dharmendra Pradhan said on Decmber 11.

Addressing an annual energy conclave, organized by KPMG, Pradhan said: “The global investment industry is today keenly looking at Indian energy sector as an attractive investment destination. About 300 billion dollars would be invested in coming decade.”

He said Asia’s biggest greenfield oil refinery-cum-petrochemical complex was being set up collectively by Indian oil marketing companies – Indian Oil, Hindustan Petroleum – with Saudi Aramco and Abu Dhabi’s ADNOC in the state of Maharashtra at a cost of about US$40 billion.

Pradhan said that 115 new oil and gas discoveries which the government had taken away from state-owned Oil and Natural Gas Corporation (ONGC) and Oil India (OIL) would be auctioned to private investors, including foreign oil firms, under Discovered Small Field (DSF) bid rounds. ONGC and OIL have also been allowed to participate in the auction to get back their own discoveries.The new fields are small with marginal oil or gas in-place; they have been lying idle ever since they were discovered years ago.

“The 67 discoveries under DSF Bid Round-1 are estimated to have in place reserves of 86 million tonnes of oil and gas equivalent. In DSF-II, 48 discoveries of ONGC/OIL offered for bid are estimated to have in place reserves of 163.08 million tonne of oil and gas equivalent,” he said.

Under DSF bid round-1, 67 discoveries, mostly of ONGC, were auctioned, while in the second round, bids for which are due next month, another 48 finds are being auctioned, he said in a written reply to a question in the Lok Sabha. As informed by ONGC, an amount of Rs 12,826 crore has been spent by ONGC on the discoveries/fields identified in the first and second round of Discovered Small Field Policy. An amount of Rs 224.27 crore has been spent by OIL in this regard,” he said.

Pradhan said: “With a view to increasing domestic production of oil and gas, the government in May 2016 launched Discovered Small Field Bid Round-I under which 67 discoveries of ONGC and OIL, which had not been put into production, were offered for auction through international competitive bidding,” Pradhan said. “The policy has now been extended to its second round to include 48 un-monetised discoveries of ONGC and OIL under DSF Bid Round-II.”

Pradhan said the government has notified the Hydrocarbon Exploration and Licensing Policy (HELP) on March 30, 2016, which is based on revenue sharing model wherein explorers offering a higher share of oil and gas to the government are awarded blocks.

The salient feature of HELP include single license for exploration and production of conventional and unconventional hydrocarbons like shale oil, he said adding also included in HELP is an Open Acreage Licensing Policy (OALP) wherein investors can carve out the area of their interest for exploration and production of oil and gas and submit expression of interest throughout the year. HELP has easy to administer revenue sharing model and marketing and pricing freedom for crude oil and natural gas has been guaranteed for operators, he said. Also, it provides for zero royalty rates for deepwater and ultra-deepwater blocks for first seven years, he added.