By Rakesh Sharma
NEW DELHI--India is holding back clearances for more than a
fifth of the exploratory blocks it has auctioned in various rounds
since 1999 to domestic and overseas energy explorers due to
defence, environmental and maritime boundary issues.
The delay is hurting the nation's plans to expedite exploration
of its oil and gas assets and ramp up local output to cut its
import bill and may threaten investments by overseas explorers in
the country's energy sector.
"Presently, 52 blocks awarded under various rounds of New
Exploration Licensing Policy bidding are pending clearance by
different organizations such as the Ministry of Defence, Ministry
of Environment and Forests, Ministry of External Affairs and state
governments," Oil Minister Jaipal Reddy told lawmakers in a written
reply in the lower house of Parliament.
Of the 52 blocks awaiting clearances, 22 are operated by Oil
& Natural Gas Corp. (500312.BY), 15 by Reliance Industries Ltd.
(500325.BY), five by BHP Billiton Ltd. (BHP), three by Cairn Energy
PLC (CNE.LN), two by Santos Ltd. (STO.AU) and one each by BG Group
PLC (BG.LN), BP PLC (BP.LN) and ENI S.p.A. (E).
Under nine auction rounds, India has awarded 249 blocks. But so
far, discoveries have been made in only 36 blocks.
Mr. Reddy said clearances for larger areas from which these
blocks are carved out are always obtained from other ministries
before offering them for bidding. But for the 52 blocks, the
companies will have to seek additional approvals from the related
ministries of defence, environment and foreign affairs to start or
resume exploratory work.
The Indian and foreign companies have already invested $12.4
billion for exploration and development activities in these blocks,
he said.
India, which saw its crude-oil import bill jump 48% on year to
6.72 trillion rupees ($121.76 billion) in the fiscal year ended
March 31, is seeking to trim it by ramping up local output with the
help of global oil and gas exploration companies and by acquiring
assets overseas.
However, the government's control over pricing and marketing of
its natural resources and lengthy approval processes for
exploration blocks have made overseas investors jittery and lose
interest in the country's energy sector.
India's Mint newspaper last month reported that the oil ministry
had warned the prime minister's office that non-clearance of blocks
could lead to an exodus of foreign companies that were brought in
with assurances of a conducive investment environment as well as
litigation and claims of damages.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
