* Aims to shift to revenue-sharing model
* Banking on gas price reform for success of next auction
(Adds details, comments by official, analyst)
By Nidhi Verma
NEW DELHI, Jan 6 India plans to offer at least
56 oil and gas exploration blocks in its first auction of
licenses in nearly two years, based on new gas-pricing and
revenue-sharing rules, oil secretary Vivek Rae said on Monday.
India, the world's fourth-biggest oil importer, wants to
quickly tap domestic reservoirs to curb its ballooning import
Foreign participation in previous exploration rounds has
been lukewarm because of a lack of transparency, regulatory
hurdles and bureaucratic delays in getting clearance.
India is banking on a recent gas pricing reform to increase
the interest abroad.
"Gas pricing is the single most important decision that will
encourage and invite more companies to invest in India," Rae
The oil ministry has obtained clearance for exploration of
56 blocks, he said, adding that more could be offered if it can
get additional environmental, defence and other permits.
The ministry plans to invite bids for the blocks in
February, he said. It has already circulated a draft note in the
cabinet for comments from the planning commission and finance
and law ministries among other agencies.
Gas prices in India will rise sharply from April 1 when a
new pricing formula linked to global indexes is implemented.
Previous exploration rounds were dominated by local firms,
mainly Oil and Natural Gas Corp, which submitted
aggressive bids to grab acreage.
Last year BHP Billiton said it would relinquish
nine blocks following delays in getting exploration permits.
Australia's Santos Ltd wants to exit two blocks due to
In the next round, India plans to ask contractors to share
revenues from the sale of hydrocarbons with the government, Rae
said. Under the current regime, companies recover their costs
and then share profits with the government.
He said some Indian and overseas companies oppose a shift to
revenue-sharing, because exploration risk is very high in
deepwater and ultra-deepwater blocks.
Analysts are sceptical about the success of India's next
auction of oil and gas blocks.
"Such models (revenue-sharing) work in the Middle East and
other regions that have an abundance of reserves, but India,
where there isn't too much oil, cant afford this model. There
are serious questions on this auction round. I doubt if they
will get a good response," said an oil and gas analyst who did
not wish to be identified.
(Additional reporting by Prashant Mehra in Mumbai; editing by