Judy Maksoud, Houston
India preps for new bid round
India has announced its New Exploration Licensing Policy III and is putting 27 oil and gas lease blocks on offer, 16 of them offshore. Nine of the offshore blocks are in deepwater. All of the blocks offer areas that have never seen a drill bit and for which new seismic data is now available.
In particular, multidarcy reservoirs in the Krishna-Godavari basin off the country's east coast promise "excellent recovery," according to Dr. Avinash Chandra, director general of the Directorate General of Hydrocarbons for India's Ministry of Petroleum and Natural Gas. "We are on the threshold of discovering oil and gas in new areas in India," he said, calling Krishna-Godavari a "proven petroliferous basin."
In the past few years, India has worked to make E&P activity easier, simplifying interaction with the Indian government and streamlining policies. "We are throwing the bureaucratic red tape in the proverbial dust bin," said Oil Minister Ram Naik at a June presentation in Houston.
The stable government, attractive incentive package, and ready market make India a good investment, he says. India needs gas and spends between $12 billion and $13 billion per year on imported oil. At present, the country is preparing for its first LNG imports (from Qatar), but importing LNG is a more costly option than developing domestic resources.
Recent developments indicate that the Indian government has recognized the benefit of developing its own oil and gas. For the first time, the country has allowed 100% foreign investment in hydrocarbon developments, which sets a precedent for increased outside investment. The hope is that the promising new plays will bring in more companies and eventually will reduce the enormous gap between domestic supply and demand.
More investment might be sparked by success stories from companies with a history in India. Cairn Energy PLC has been active in India for 10 years and has seen tremendous results from its investments. In 2001, the company had nine discoveries from 11 wells, some in deepwater.
The move into deepwater is significant for India, a country Chandra called "the latest deepwater destination in the world." India is the fifth deepwater play, following the North Sea, the Gulf of Mexico, Brazil, and West Africa, he said.
Australia to open new areas for bid
Australia is gearing up to put 41 exploration areas up for bid. A number of seismic companies, including TGS-Nopec, Veritas, and PGS, have been gathering 2D and 3D seismic surveys over the basins that will be included in the upcoming licensing. Two sets of blocks will be put up for bid in the next 10 months.
The first bidding round ends Oct. 24, 2002. The blocks in this round are located in the Northern Territory and the Territory of Ashmore/Cartier Islands, Victoria, and Western Australia, including blocks NT02-1, AC02-1, W02-12 to 15, and V02-2.
The second licensing round will be held next year, closing on April 10, 2003. Some blocks in the second are off Tasmania and South Australia, including NT02-2 to 9, W02-1 to 11, S02-1 to 8, V02-1, V02-3 to 4, and T02-1 to 4.
Oil discoveries will be of primary importance if Australia is to address an expected sharp decline in oil production in the near future. There is some fear that declining national oil production could leave the economy open to disruptions in energy supply that could have repercussions in other areas of industry.
In light of these fears, the Australian government has begun investigating incentives to boost exploration. A perceived need for multinational participation may help to push through tax relief for exploration, including a change in the Petroleum Resources Rent Tax. Modification of this tax would encourage frontier and deepwater exploration as well as development of marginal oil accumulations and stranded gas resources, according to Australia's Minister of Resources Ian Macfarlane. His objective is to create a set of exploration opportunities and policies that the government should pursue in order to meet the stated goals.
