India taps newcomers to unlock $7bn energy fields

Bloomberg

India approved awarding rights for 31 small discovered oil and gas fields in its first auction in six years, entrusting most of these to new entrants as it seeks to boost local production.
Sun Petrochemicals Pvt., a privately owned company formed by the directors of drugmaker Sun Pharmaceuticals Industries Ltd., and engineering company Megha Engineering & Infrastructure Ltd. were among 15 new entrants out of 22 companies that have received rights to develop the fields, according to a government statement. Established players, including Hindustan Oil Exploration Co. and state-run Oil India Ltd., also won some fields.
Development of these small oil and gas fields is crucial for Prime Minister Narendra Modi’s plan to reduce oil imports by as much as 10 percent by 2022. The awarded blocks will boost India’s oil output by as much as 15,000 barrels a day and gas production by 2 million standard cubic meters a day, according to the Directorate General of Hydrocarbons.
“These fields hold potential for lot of investments in India over the next decade,” Atanu Chakraborty, the head of the DGH, said in a phone interview on Wednesday. “It will open new avenues for jobs and create entrepreneurs.”
The 46 fields that went under the hammer were discovered by Oil and Natural Gas Corp. and state-run Oil India Ltd. with estimated in-place oil and gas reserves of about 625 million barrels, or about 85 million tons. They weren’t developed as the explorers focused on bigger fields. Larger established companies like Reliance Industries Ltd. and ONGC stayed away from the auctions.
“It is exciting that a lot of new players are coming — it’s very healthy for the industry,” P. Elango, managing director of Hindustan Oil Exploration said in a phone interview.
“It creates a new set of players in the market, which can fuel the next wave of growth in the industry.”