India is planning its largest ever auction of oil and gas exploration blocks and has set a tentative start date of mid-November to begin marketing the sale around the world.
The long-awaited auction is a crucial part of India's efforts to boost domestic oil production to keep pace with its rapidly growing economy and to help mitigate the growing burden of domestic fuel subsidies, which are set to rise by up to 70 per cent this year.
Presentations will begin in south-east Asia and Australia in November before moving to North America and the UK in January, said VK Sibal, the head of the government's Directorate General of Hydrocarbons.
Mr Sibal, one of the most senior bureaucrats in India's oil industry, said the country urgently needed to undertake mass exploration of its under-explored offshore fields so that it could work out a viable energy strategy for the coming decades.
"We are a growing economy and consumption of energy is growing rapidly. If we are to sustain such growth in a country like ours, we will need to have every different kind of energy source in our portfolio," Mr Sibal told the Financial Times in an interview.
India's domestic oil and gas production is failing to keep pace with economic growth. The country now imports about 76 per cent of its oil and gas needs, up from 70 per cent a few years ago, Mr Sibal said.
With oil prices rising above $80 a barrel, domestic fuel subsidies designed to protect the poor have soared and are projected to cost up to Rs600bn ($15bn, ?7.4bn, €10.6bn)in the fiscal year ending March, compared with Rs360bn a year earlier.
Mr Sibal said the government would announce the start of the roadshow for the auction, the seventh such round under a process known as the "New Exploration Licensing Policy" or "Nelp", in Mumbai in the second week of November.
Up for bidding will be 80-85 blocks covering an area of 400,000 square kilometres. This is larger than Nelp VI last year when the government auctioned 52 blocks with a gross area of 352,000 square kilometres, which itself was many times bigger than earlier rounds.
According to the tentative schedule, the roadshow will move to Singapore, Malaysia, and Perth and Adelaide in Australia in the third week of November.
The government will then resume the roadshow in the second week of January, visiting London, Calgary and Houston.
The challenge for the government, however, will be to attract more global oil and gas majors, such as Chevron and Exxon Mobil, to the Nelp process.
So far, the large multinationals have largely sat on the sidelines while domestic producers such as Reliance Industries, India's largest private-sector company, and Oil and Natural Gas Corp, the state-owned operator, have taken most blocks.
The exercise also follows a challenging year for oil and gas policy.
There was widespread concern in the industry earlier this year that the government might intervene to regulate the price at which Reliance could sell gas from one of its fields rather than allow it to be sold at market prices. ( FT )