KOLKATA (miningweekly.com) - India over the weekend unveiled 46 oil and gas blocks that would be put up for auction for development by domestic and foreign investors, but the government is yet to finalise a policy framework, casting doubts over the response from foreign majors.

The federal government has not yet firmed up whether successful bidders would have to enter into production-sharing contracts with the government, as was the case with previously allocated blocks, or if they would be required to sign revenue-sharing agreements, as was preferred by the Oil and Gas Ministry.

In the case that the government adopted the new revenue-sharing model with oil and gas developers, the proposal would need to go before the Cabinet of Ministers’ apex economic policy framing body.

While the government showcased 46 inland, shallow-water and deep-water blocks, the lack of a policy framework and guidelines for the proposed auctions would be a dampener for overseas oil and gas industry majors that may have been interested in participating in the bids, government officials said.

The government’s ambiguity over which model to adopt for the auctions stemmed from the fact that two expert committees had taken differing stands.

A committee headed by C Rangarajan, chairperson of the Prime Minister’s Economic Advisory Committee, had recommended a revenue-sharing agreement between the block developers and the government. However, another committee, headed by Vijay Kelkar, had favoured continuing the production-sharing agreement between developers and government that pertained to blocks allotted earlier, even though this model has been criticised for allowing developers to inflate production costs and depress production.

“We are encouraging domestic and global companies to explore potentially hydrocarbon-rich areas in the framework of a stable and enabling policy environment,” Prime Minister Manmohan Singh said on Sunday while inviting investors to participate in the allocation of hydrocarbon blocks.

However, despite the aggressive pitch for investors and the promise of an early announcement of the contract model to be adopted, government officials said that differences within the government over production sharing or revenue sharing could impact the response from investors, particularly in the wake of the recent decision by mining major BHP Billiton to relinquish nine oil and gas blocks, following claims of delays in government support and clearances.

The 46 oil and gas blocks to be put up for auction under the tenth round of the New Exploration Licensing Policy (NELP X) would cover 23 944 km² of land, 47 745 km² of shallow water and 94 364 km² of deep water.

The block allocation under the NELP X would, for the first time, offer investors a comprehensive single licence to explore and develop all forms of hydrocarbon - oil, gas, shale and coalbed methane - in keeping with the preference of each oil and gas industry investor, officials said.