News: India hopes for $7B from oil investments

(AP 11/04/2006) New Delhi - India expects to earn more than $7 billion when it awards 55 new oil and natural gas exploration fields to successful bidders over the next two years, a top Indian official said Tuesday.

"We hope that all 55 blocks will be snapped up. We expect over $7 billion dollars investment within 24 months," Murli Deora, India's petroleum minister, told reporters.

Meanwhile, India is on schedule to start production of coal-bed methane gas by 2007, petroleum ministry officials said.

"We expect to produce 20 million cubic meters a day of coal-bed methane gas beginning next year," said M.S. Srinivasan, petroleum secretary.

In the latest round of bidding, onshore oil exploratory blocks are being offered in 11 states, mostly in central and northeastern India.

The offshore blocks being offered are located off the country's western and eastern coasts and the Andaman islands in the Indian Ocean.

Ten coal-bed methane fields are being offered for exploration in the states of Andhra Pradesh, Chattisgarh, Madhya Pradesh, Rajasthan, Jharkhand and West Bengal.

India has so far awarded 110 fields through an international competitive bidding process to boost the country's oil and gas production.

India, one of the world's most energy-intensive economies, imports more than 70 percent of the crude oil it consumes.

India consumes about 90 million cubic meters of natural gas per day, which is only sufficient to meet around 60 percent of local demand. The demand for natural gas is expected to increase as many industries are increasingly willing to switch over to the cleaner fuel. The country also aims to build more power plants that use gas instead of coal, which is limited.

A series of gas discoveries along the Indian coast in recent years, combined with the opening of the Indian market to supplies from outside, have fueled prospects for increasing gas consumption in the country.

Natural gas also costs less than traditional fuels, such as imported petrol and diesel, and Indian policy makers feel it would make the country less vulnerable to volatility in international oil prices.

India's energy demands are expected to soar in the coming years as its economy grows. The country's annual consumption of petroleum products is estimated to be close to 127 tons this year, while domestic output has remained flat for years at around 36 tons a year.