Yelp!

It is not surprising that bidder response in the ninth licensing round for hydrocarbon acreage has been lacklustre. Reportedly, 74 bids — mostly from stateowned ONGC and several small companies — have been received for 33 of the 34 blocks on offer for exploration and production (E&P ). Bidding for E&P blocks in Indian sedimentary basins also involves much regulatory risk, policy rigidities and other attendant delays. Notice that the $9.6 billion Cairn-Vedanta deal has been awaiting governmental nod for several months now. Meanwhile, the fiscal regime for oil E&P has also changed, apparently to be in line with international norms. Be that as it may, the seeming lack of transparency and regulatory predictability appear to have watered down investor interest , for years. Global oil majors have generally preferred to stay away from bidding, both initially in the 1990s, and for a decade now under the new exploration licensing policy for oil & gas or Nelp. Of the more promising eight deepwater blocks on offer in Nelp IX, five have gone to ONGC, two to Reliance and one to Britain’s BG, which has tied-up with mining major BHP for the bid.

The recent gas finds in the Krishna-Godavari basin in the eastern offshore and the Cairn oil find in Rajasthan point at attractive geological prospects here. The way ahead is to opt for clear-cut rules and much more openness generally, when it comes to oversight in the upstream oil & gas sector. Abroad, the mature oil & gas licensing regimes have elaborate codes of practice, guidance notes and up-to-date legislation for stepped-up investor comfort in the high-risk and hugely capital-intensive E&P sector. Also, the government, on its part, needs to be far more proactive in garnering the muchneeded investments. Note that almost half our sedimentary basins remain only partially explored. The sevenyear tax holiday hitherto available on profits on oil production has now been replaced with an investment-linked tax incentive framework. But in tandem, what is essential is to overhaul sectoral oversight, shun opacity and the overt reliance on the case-by-case approach to upstream oil & gas regulation.