(BS)
In a first-of-its-kind three-way partnership, British energy giant BP, Reliance Industries, and state-run ONGC acquired a Gujarat offshore block for exploration of natural gas in the latest bidding round.
The joint venture picked block GS-OSHP-2022/2 in the ninth round of Open Acreage Licensing Policy (OALP-IX) with ONGC as the top overall bidder. The Open Acreage Licensing Policy permits companies to shortlist and suggest areas for exploration beyond current deepwater blocks.
ONGC and its partners in the joint venture won 15 blocks in total. The company won 11 blocks on its own and four in collaboration. Vedanta Ltd, headed by Anil Agarwal, had bid for all 28 blocks on offer and won seven, officials said.
“We are pleased to announce that we have entered into an agreement for a new exploration license on behalf of the consortium of ONGC (40 per cent) RIL (30 per cent) and BP (30 per cent) for block GS-OSHP-2022/2 (Saurashtra Basin) in the OALP IX bidding round. This strategic partnership unites the strength of India’s biggest national oil and gas player, ONGC, India’s biggest conglomerate, Reliance Industries, and energy giant BP. This alliance combines the capabilities of all concerned and is yet another step towards enhancing India’s energy security agenda,” a BP spokesperson told PTI.
Meanwhile, Oil India Ltd secured six blocks on its own and three in alliance with ONGC. The contracts under OALP-IX were signed at an event attended by Oil Minister Hardeep Singh Puri. In this round, a total of 28 blocks covering an area of 1.36 lakh square kilometres were up for bidding. The highlight was the joint bid by Reliance-BP and ONGC for a block off the Gujarat coast.
Pallavi Jain, Director General of the Directorate General of Hydrocarbons (DGH), pointed out that the last eight rounds have witnessed committed investments aggregating $3.77 billion.
Bidding details
As of the closing of the OALP-IX bidding on September 21, 2024, ONGC had bid for 14 blocks individually and four in association with Oil India Ltd and Indian Oil Corporation. With the bid with Reliance-BP included, ONGC had aimed for 19 out of 28 blocks. Vedanta bid for all 28, and Sun Petrochemicals Ltd bid for seven.
Four blocks had three bids placed upon them, whereas two bidders each were for the rest of the blocks, one of them being Vedanta Ltd. Blocks were allocated on the highest revenue share bid for the government and the quality of the proposed work programme.
Notably, the government has now opened the 10th round (OALP-X), bidding for 25 blocks over 1,91,986.21 square kilometers — its biggest bidding round to date. The bidding closes on July 31. The blocks include six onshore, six shallow-water, one deep-water and 12 ultra-deep-water blocks.
OALP-IX had put up nine onshore, eight shallow-water and 11 ultra-deepwater blocks spread over eight sedimentary basins, covering an area of 1,36,596.45 square kilometers.
Since OALP started in 2017, a total of 144 blocks covering 2,42,055 square kilometres have been awarded. In OALP-VIII, ONGC had won seven of the 10 blocks, with Reliance-BP, Oil India and Sun Petrochemicals winning one each.
Policy shift
As mentioned above, companies can identify and propose new areas for oil and gas exploration outside existing licensed blocks under the Open Acreage Licensing Policy. The proposing company is granted a five-point bidding advantage. Nevertheless, private sector participation continued to be thin following the first round, where Vedanta won 41 of the 55 blocks and went on to win 10 more in subsequent rounds. The subsequent rounds have been dominated by public sector companies.
Reliance and BP, which operate the KG-D6 deepwater block in the Krishna Godavari Basin in partnership, produce some 28 million standard cubic metres of gas daily. The government wants to increase domestic production through augmented exploration to cut down its $222 billion a year oil import bill.
It is worth mentioning that ONGC is one of the top five public sector firms with the highest dividend yields in FY25, as per Axis Securities. At a 6 per cent dividend yield, ONGC ranks only behind Coal India’s 7 per cent. In the past 12 months, ONGC has paid a dividend of Rs 13.5 per equity share.
Earlier participation patterns
Reliance and BP have displayed limited participation in earlier OALP rounds, having participated in just two of the earlier eight rounds since 2017. They have emerged victorious both times. Interestingly, ONGC had skipped the deep-water Krishna Godavari basin block in the previous round (OALP-VIII), which was sought by the Reliance-BP combination.
