Foreign firms lower oil revenue estimates
A sluggish participation of foreign companies in exploration and production (E&P) so far has prompted the government to moderate its revenue collection estimates from the petroleum sector in FY25 (2024-25), officials said.
Under the petroleum head, the Interim Budget has listed Budgetary Estimates (BE) of ~15,933 crore non-tax revenue collection in FY25. This is ~1,011 crore more than the Revised Estimates (RE) of ~14,922 crore for FY24.
However, the latest figure points to an overall downward trend. BE FY25 is as much as 38 per cent lower than what the government had initially hoped to get in FY24. In BE FY24, the Centre had initially mentioned ~24,185 crore. BE FY25 is also 19.4 per cent lower than the actual collections of ~19,785 crore in FY23, and 20.4 per cent lower than the ~20,036 crore collected in FY22.
The government lists receipts from licence fees for the right of exploration of oil and gas, as well as royalty on off-shore crude oil and gas production. It has been difficult to get foreign oil producers to participate in the bidding process under the Open Acreage Licensing Policy (OALP). Under OALP, eight rounds of bidding have already been held and blocks have been awarded.
“The government is constantly engaging with foreign companies and has made the process of exploration much more flexible and easier. Globally recognised dispute resolution mechanisms, and play-based exploration have been allowed. But participation (of foreign companies) in E&P has been muted so far,” an official said.
This has been taken into account while calculating the government’s potential revenue windfall from the petroleum sector in FY25, he added.
Officials also pointed to a data centre being opened at the campus of University of Houston in Texas, United States, to make the geographical data of India’s sedimentary basins easily viewable. Several international oil companies including Exxonmobil, Shell, Total-energies, Eni, Chevron, Posco, Japex, Murphy Oil and EOG have visited the data room so far.
Smaller bidding rounds The revenue generation estimates for FY25 were also affected due to the latest bid round — OALP IX — being smaller than expected. Opening for bids in January, it offers 28 blocks with an area of approximately 1.36 lakh square km. Out of these, 23 blocks are based on expressions of interest (Eois) received from companies while five blocks have been carved out by the Directorate General of Hydrocarbons.
While this was one of the largest areas put up for exploration so far, officials had earlier said OALP IX would make up an ever larger area of 2.2 lakh square km. It was set to double the area under exploration and production awarded under the previous eight rounds.
Meanwhile, OALP VIII ran for a year till July 5, 2023. First opened on July 7, 2022, the round offering 10 blocks saw the deadline for submission of bids extended more than four times.