India awards $7 billion of oil and gas assets

India approved awarding rights for 31 small discovered oil and gas fields in its first auction in six years, entrusting most of these to new entrants as it seeks to boost local production. 15 new entrants out of 22 companies have received rights to develop the fields.

Development of these small oil and gas fields is crucial for Prime Minister Narendra Modi’s plan to reduce oil imports by as much as 10% by 2022. The awarded blocks will boost India’s oil output by as much as 15,000 bopd and gas production by 2 MMscmd. The 46 areas that went under the hammer have an estimated in-place oil and gas reserves of about 625 MMbbl. They weren’t developed as the explorers focused on bigger fields.

The government had received 134 bids from as many as 42 companies in the auction round that closed Nov. 21, after rules were relaxed allowing pricing freedom for oil and gas and uniform policy for all kinds of hydrocarbons.

Since the fields are small and presence of oil or gas is already established, production can be started quicker than other larger fields the country plans to auction later this year. The estimated revenue from these blocks is seen as much as 464 billion rupees ($7 billion).

India’s $2-trillion economy imports more than 80% of its crude requirement and a heavy reliance on imports risks its status as the fastest-expanding major economy in the world. The International Energy Agency expects the country to be the fastest-growing crude consumer in the world through 2040.

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