Oil majors like BP, Shell and Exxon Mobil are among a throng of investors who are bidding for 55 exploration blocks covering 30,00 sq. km for oil and gas exploration rights on India's continental shelf.
This is the largest auction of oil and gas acreage to be held in India and interest in the licensing has been high after Cairn Energy's billion-barrel Mangala discovery.
Murli Deora, India's Petroleum and Natural Gas minister, said that he was confident that investor perception of India's oil and gas prospects was changing rapidly.
More than two third's of India's oil is imported with the oil import bill currently at $45 billion. This bill is increasing with rising demand in India and is adding to the financial burden of supporting fuel subsidies to the nation's rural poor.
Subsidies on fuel for cooking and lighting in rural India costs the government up to $15 billion.
State owned Oil and Natural Gas Corporation is in a race with Chinese oil companies in the hunt for foreign sources of fuel.
BG Group of Britain and BHP Billiton are seeking acreage in the Indian licensing round. Cairn Energy is looking to extend its Indian activity with a bid for 11 blocs.
Chevron, which is already in partnership with India's Reliance Energy has also bid.
The Indian government changed the bidding rules to give more weight to companies with “international credibility” so that it could attract big oil’s expertise and deep pockets.
Chevron, Exxon and BP are thought to have been aggressively pursuing exploration rights in the Krishna Godavary basin where substantial gas reserves have already been found.
Bidders will be judged on their technical skill, scale of proposed work program and the profit share they seek from the state. The results will be announced at the start of next year by the Indian government.
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