Oil Exploration firms grapple with overseas woe

India's oil and gas explorations face fresh hurdles. While New Delhi has never been able to attract
top multinational energy giants to drill in its territory, it is now scaring away even the few foreign
players which did venture here. The main reason is the delay in granting approvals for exploration
activities. Italian exploration major Eni SpA, Australia's Santos, and the UK-based Foresight Group
are among those looking to exit. Exploration work is stuck also at blocks awarded to the Australian
company, BHP Billiton Petroleum, and Canada's GeoGlobal Resources. In fact, bureaucratic delay
was the reason Norway's Statoil ASA and Brazil's Petroleo Brasileiro SA both cited when, in 2010,
they pulled out of a venture with state-run Oil and Natural Gas Corporation to develop a block in the
Krishna-Godavari basin, off India's east coast.
These companies came to India after winning blocks auctioned under the New Exploration Licensing
Policy (NELP), which ended state monopoly in oil and gas exploration. The policy was decided upon
in 1997/98 to boost local exploration and production work, and also attract foreign players.
Increasing local output is essential as India imports nearly 80 per cent of its crude oil needs. In
2011/12, India spent $140 billion (Rs 7.26 trillion; one trillion equals 100,000 crore) on oil imports,
up 40 per cent from the previous year.
NELP has not been very successful in attracting foreign direct investment (FDI) into the oil and gas
sector. The policy also has largely failed in luring global giants such as Exxon Mobil, Chevron, BP,
ConocoPhillips, and Royal Dutch Shell. The oil ministry does not appear to be worried about the
trend.
Because of regulatory delays BP could not buy 30 per cent stake in Reliance industries Ltd.s blocks.
Among the foreign firms which seem to be fed up of the delays is Eni SpA. The company plans to exit
all its three blocks. It also wants to sell its 47.16 per cent stake in the Mumbailisted Hindustan Oil
Exploration Company. Exploration work at a block near the Andaman and Nicobar islands was stalled
after the Department of Space said the block fell in the trajectory of the Indian Space Research
Organisation's rocket stage impact zone. A senior oil ministry official, who is privy to the
developments, said the ministry has taken up the matter with the prime minister's office (PMO).

Eni's block in Rajasthan is stuck as well. The block falls under a protected forest area, and Eni was
required to take permission from the Supreme Court to undertake exploration. The oil ministry
official said the company did not take the court's permission, and has also not made the minimum
investment required by its contractual obligations. The ministry is contemplating action against Eni,
which could include a penalty, the official added.
Meanwhile, Santos International Operations Pty Ltd is embroiled in a diplomatic row between India
and Bangladesh. Santos had won two blocks in the sixth round of NELP. These two blocks, in the Bay
of Bengal, cover an area of 16,500 sq. km, and both countries have claimed territorial rights in the
region.
BHP Billiton Petroleum had to stop exploration work at its 10 offshore blocks, off the west coast near
Mumbai, after the Indian Navy objected to the company carrying out surveys in the navy's practice
areas.