Infrastructure firms join the rush for black gold in Nelp-VII

MUMBAI: India’s biggest offering of exploration acreage put up for auction is turning out to be exciting. Apart from high-profile bidders like steel magnate Laxmi Niwas Mittal, who are expected to be in the fray for the blocks offered under the NELP (New Exploration and Licensing Policy), a host of infrastructure firms are planning to diversify from roads, ports, airports and power, to hunt for black gold.

Whether the government manages to attract the global biggies remains to be seen, but NELP-VII initial reports indicate that Indian infrastructure companies like GMR Infrastructure, GVK Group, Adani and Welspun are likely to be among the bidders.

For some (mainly power producers), it’s a diversification that could eventually secure fuel linkages if they get lucky. While for others, the fact that oil is touching $100 levels makes it an exciting opportunity. The government has also relaxed bidding norms to make it easier for the first-time bidders. Small blocks categorised as ‘S’ blocks, with area less than 200 square km, are now on offer. For these blocks, bid evaluation will be on the basis of work programme and fiscal packages parameters only and technical competency is not considered.

Also, if the parent company gives a guarantee, then the bid will be evaluated on the guarantor’s strength. Confirming the development, petroleum secretary MS Srinivasan told ET, “Indian companies like GMR and GVK are likely to participate for the first time in the upcoming NELP auctions. Besides drawing oil, we want mid-sized firms to explore oil in India. Over 30% of oil production in the US is contributed by the small oil firms, which produces as less as 15-20 barrels of oil per day.”

The Adani group, known for its port, trading and SEZ businesses, has plans to enter oil & gas exploration and production. The group has strong plans in power generation and looking for gas linkage. Recently, the company floated a JV company with the Mumbai-based Welspun group to bid for blocks under NELP-VII, Sanjay Gupta, CEO of Adani Ports, said.