30-06-08 India, Asia's third-biggest oil consumer, received bids to explore fewer oil and gas areas than offered after the government withdrew a tax break on some new projects and a shortage of drilling equipment deterred companies.
BHP Billiton, the world's largest mining company, BP, BG Group and Reliance Industries were among 96 companies that bid for 45 of the record 57 areas, Director General of Hydrocarbons V.K. Sibal said in New Delhi.

India is competing with Africa and South America to attract explorers amid concern that crude prices may soar past $ 150 a barrel, boosting inflation and curbing economic growth. The Oil Ministry extended the bidding deadline three times since April, seeking a clarification about the withdrawal of a tax holiday for natural gas projects.
"I don't think fewer bids are a reflection of India's exploration round,'' said Tony Regan, an energy consultant with Nexant in Singapore. "Resources and equipment are scarce and bidders are concerned that the government can hold them to their development plan. You have to wait five years to get rigs.''

The current round attracted 181 bids for 12 deep-water areas, seven shallow-water areas and 26 onshore blocks, Sibal said at the auction venue. The provisional winners are being named and the areas will be awarded after three months, he said.
India, seeking to boost crude-oil production and lower dependence on imported fuel amid record prices, offered nine areas in shallow waters, 19 in deep waters and 29 onshore. At the previous auction that concluded in March 2007, India received 165 bids from 68 companies for 55 areas, of which contracts were signed for 52, according to the Directorate General of Hydrocarbons, India's oil and gas regulator.

BHP Billiton, in partnership with India's GVK Power & Infrastructure, won drilling rights for seven deep-water areas, the regulator said. Oil & Natural Gas Corp., India's biggest energy explorer, won four onshore blocks. It also won three deep-water blocks, five shallow-water and eight onshore areas in partnership with other companies, including Oil India Ltd., Indian Oil Corp. and Tata Petrodyne.
BP and Reliance jointly won a bid for a deep-water area. GAIL India, in partnership, won one onshore block, and Indian Oil won an onshore area as well.

India may earn as much as $ 8 bn from the auction. The investment will come from spending by the companies on exploring the 57 areas, Finance Minister Palaniappan Chidambaram said while presenting his budget on Feb. 29.
India opened 165 areas for exploration in the previous six rounds of bidding that started in 1999. BG Group, the UK's third-biggest natural gas producer, and Santos, Australia's third-biggest oil and gas producer, are among the companies that won acreages in the last auction.

Rig shortage
The current auction was delayed twice last year because of a shortage of rigs, platforms and contractors to build pipelines. India's greatest need is for rigs that drill in water depths of as much as 10,000 feet. The government postponed the submission of bids until April 25 from an initial deadline of April 11. The last day was extended to May 16 to allow time for clarification on the tax holiday and further delayed to June. In this year's federal budget, the government scrapped a seven-year tax holiday on gas discoveries from April 1, 2009. Oil producers will still be eligible for the incentive.
India, the world's second fastest-growing major economy, depends on imports for more than 70 % of its oil needs.