Hyderabad, July 28: For the first time, a state government has decided to get into the oil and gas exploration business. The Andhra Pradesh government has decided to bid for exploration of natural gas in India’s largest- ever auction of oil and natural gas blocks, under the eighth edition of the New Exploration Licensing Policy NELP- VIII), which would be re- launched on August 8.
Chief Minister Y. S. Rajasekhara Reddy has directed the officials concerned to work out the modalities for bidding, which would close by mid- October.
According to sources in the chief minister’s office ( CMO), the Andhra Pradesh Industrial Infrastructure Corporation ( APIIC), along with AP Power Generation Corporation ( APGenco) would float a joint venture ( JV) company, on the lines of Gujarat State Petroleum Corporation ( GSPC), which had won the bids for exploration of oil and natural gas blocks under NELP- III in 2001- 02 and struck huge quantities natural gas reserves in the Krishna- Godavari basin.
Andhra Pradesh did not evince interest in bidding for exploration of natural gas in the Krishna Godavari ( KG) basin eight years ago under NELP– III. The then Telugu Desam government had received an offer from the Union Ministry of Petroleum and Natural gas, but it did not evince interest on the ground that it was too expensive a proposition and there was no guarantee of striking gas in the K- G basin even after spending a few thousand crores.
“ Had we taken the risk then, we would not have had to beg for gas supply from Reliance Industries now for our industrial and domestic needs. We would not only have been self- sufficient in gas, but would also have been in a commanding position to supply gas to other states, because of our locational advantage,” the CMO said.
Earlier under the NELP- VIII, 70 blocks of oil and natural gas would be offered for exploration bidding. These include 24 deepsea blocks, 28 shallow water blocks and 18 on- land blocks.
Besides, 10 coal bed methane ( CBM) areas will also be offered for bidding, hoping to attract, in all, $ 3 billion investment in exploration.
The NELP- VIII was originally launched on April 9 with August 10 being the last date for bidding.
But it was deferred over ambiguity on tax holiday for natural gas. With finance minister Pranab Mukherjee, in his recent budget speech, restoring the tax holiday and other concessions, the auction is being relaunched and the last date is expected to be extended to October 10.
The chief minister has ordered that the process for formation of the JV should be completed in two weeks. While the APIIC would be the leading partner in the JV, APGenco, with its healthy balance sheet, would be useful in mobilising resources from financial institutions.
The JV would engage international consultants for the preparation of bid documents.
Besides, it would involve experienced global companies as strategic partners in the JV, so that exploration could be done on scientific basis. According to estimates, it would require Rs 80- 100 crore to explore each block.
“ Let us not get discouraged. If we don’t strike gas in one block; even if we find gas reserves in one block, it would reap rich profits for the state,” a CMO official quoted the chief minister as saying.
–Agencies