The Directorate General of Hydrocarbons (DGH), upstream regulator of India, said the country is planning to sells remaining one million square kilometers of potential exploration regions in the next two to three years, buoyed by latest oil and gas discoveries. It recently opened exploration round, offering 70 blocks as it anticipates companies to grab the opportunity to strike good bargains because of the economic turndown.

The discoveries, and their expansion, will show useful as the nation imports more than 70% of the crude it consumes and requirement is projected to increase further as the economy recovers.

India has until now selected 68% of its 3.14 million square kilometers of area for exploration to various firms.

Foreign oil companies including Anadarko Petroleum, Samsung and Noble Energy Ltd. had indicated interest in the latest round of the new exploration licensing policy (NELP), said VK Sibal, director-general of DGH.

“For big firms, the credit squeeze and downturn is not a problem, rather this is the best time to avail prospective acreage at cheaper rates,” Sibal said.

Out of the country’s 26 sedimentary basins, exploration operations have been started in just 15 basins.

“Our country holds about 205 billion barrels of hydrocarbon resources. Of this, 138 billion barrels are yet to be found, and the remaining has been established on the basis of drilling work done,” Sibal said.

However, Sibal said the numbers are based on limited exploration work completed in the country.

“These numbers are based on the scanty data, based on scanty wells that we have drilled, because in some places exploration activity is yet to begin and in many places it is very low,” he said.

“In the east coast alone, our drilling density is 0.6-0.7 well per thousand square kilometers.”

Attracting Investors

Only 20% of India’s sedimentary area is well drilled, 15% are poorly explored and exploration work has been initiated in 44% of the area.

India’s east coast, where Reliance Industries Limited (RIL) has found vast gas reserves, alone holds as much as 200 trillion cubic feet (tcf) of gas resources, Sibal said.

“These are very early numbers as India’s east coast was opened for exploration in the first round of NELP,” he added.

RIL commenced gas production from its deepwater east coast block in the Krishna Godavari basin from April 2009 and the fields are likely to pump 80 million cubic meters a day of gas by December 2009.

“There is a huge gap between resources and established reserves, so it provides a big opportunity to E&P companies,” he said. “Around 21-21 tcf of reserves have been established in the east coast based on drilling by Reliance, ONGC and GSPC,” he said, referring to Oil and Natural Gas Corp and Gujarat State Petroleum Corp.

Discoveries in previous licensing rounds, which will double India’s natural gas output to 160 million cubic meters a day and raise crude oil output by at least 25%, should help in attracting bids for the latest round, Sibal said.

India’s latest licensing round is launched at a time when a number of such announcements had also been made in other countries, though the overall activity outside India had not been as busy this year compared with previous years.

“Competition will be there as more and more countries are launching their exploration rounds,” Sibal said.