The state of the global E&P market can be witnessed from the lackluster performance of the latest Brazilian auction for E&P blocks. Most of blocks went unsold.
8Brazalian national oil company Petrobras sat out the oil licensing round and most multinationals stayed out too.
8The onland blocks were taken over by local startups and mid-sized companies which are likely to use political clout to wriggle out of work programme commitments should the going get difficult.
8The auction took place amid a slump in crude prices and a management crisis as Petrobras, the country’s dominant producer, as it grapples with cash constraints and allegations of under-the-table payments.
8The poor response is despite the fact that Brazil is one of the world's most hydrocarbon rich countries but will the situation be different in India should an auction happen today?
8The answer is both a "yes" and a "no".
8Private companies are likely to stay away as the new model will make it tougher for them to decide on a revenue sharing plan when prices are down and the geology is uncertain.
8Foreign companies are likely to stay out completely as they cut investment budgets in keeping with low prices and lower returns.
8There are unlikely to be any private sector bids for Indian offshore blocks at this point in time, particularly when operators are unable to tap even discovered reserves given the lopsided gas pricing policy.
8But the public sector may be called upon by the government to bid for some uneconomical blocks so as to ensure that the auction is a success.
8However even at current low prices, there is likely to be significant competition for the small and marginal fields that are to be auctioned out. Private players are likely to make a beeline as the reserves in these fields have been mostly discovered, and the cost of recovery should be lower than current global prices. More E&P work will in probably raise the reserve estimates and bring in more money to the operator.
8But whether these fields will leave enough money in the hands of the operators under a new pricing paradigm after sharing revenue with the government remains a moot point.
ONGC and OIL are also likely to participate enthusiastically in the bidding round as the cost economics have turned positive. This is because market price is to be given for the gas that will be produced, and this may crowd out private players.
8There are the examples of investors in the the Ravva and Panna-Mukta-Tapti fields that private players will try and emulate. The owners of these fields have gone on to become unicorns, pocketing billions of dollars from the oil and gas business by first learning the business and then investing well.
For more details visit indianpetroplus.com
8Brazalian national oil company Petrobras sat out the oil licensing round and most multinationals stayed out too.
8The onland blocks were taken over by local startups and mid-sized companies which are likely to use political clout to wriggle out of work programme commitments should the going get difficult.
8The auction took place amid a slump in crude prices and a management crisis as Petrobras, the country’s dominant producer, as it grapples with cash constraints and allegations of under-the-table payments.
8The poor response is despite the fact that Brazil is one of the world's most hydrocarbon rich countries but will the situation be different in India should an auction happen today?
8The answer is both a "yes" and a "no".
8Private companies are likely to stay away as the new model will make it tougher for them to decide on a revenue sharing plan when prices are down and the geology is uncertain.
8Foreign companies are likely to stay out completely as they cut investment budgets in keeping with low prices and lower returns.
8There are unlikely to be any private sector bids for Indian offshore blocks at this point in time, particularly when operators are unable to tap even discovered reserves given the lopsided gas pricing policy.
8But the public sector may be called upon by the government to bid for some uneconomical blocks so as to ensure that the auction is a success.
8However even at current low prices, there is likely to be significant competition for the small and marginal fields that are to be auctioned out. Private players are likely to make a beeline as the reserves in these fields have been mostly discovered, and the cost of recovery should be lower than current global prices. More E&P work will in probably raise the reserve estimates and bring in more money to the operator.
8But whether these fields will leave enough money in the hands of the operators under a new pricing paradigm after sharing revenue with the government remains a moot point.
ONGC and OIL are also likely to participate enthusiastically in the bidding round as the cost economics have turned positive. This is because market price is to be given for the gas that will be produced, and this may crowd out private players.
8There are the examples of investors in the the Ravva and Panna-Mukta-Tapti fields that private players will try and emulate. The owners of these fields have gone on to become unicorns, pocketing billions of dollars from the oil and gas business by first learning the business and then investing well.
For more details visit indianpetroplus.com
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