Investor Hesitation Stalls India's Offshore Oil Push, Leading to Repeated Delays
India's ambitious OALP-X offshore oil and gas licensing round faces significant delays, with the deadline extended for a fourth time to February 18. Despite being the nation's largest offering, investor participation is low due to regulatory complexity, high tax burdens (up to 70%), and uncertainties in drilling rules. This challenges India's goal to reduce its over 85% oil import dependence, even as demand rises and domestic production remains flat, despite efforts to attract foreign majors.
India's largest-ever offshore oil and gas licensing round, OALP-X, is encountering significant hurdles, leading to its bidding deadline being extended for a fourth time, now until February 18. Launched with considerable fanfare during India Energy Week, the initiative encompasses nearly 192,000 square kilometers, primarily in offshore regions across 13 sedimentary basins. However, there's a clear disconnect between India's ambition to enhance domestic oil and gas production and the actual interest from investors. Unofficially, the delays stem from a confluence of factors, including complex regulatory frameworks, substantial tax burdens where government takes can reach 60-70% of upstream revenues, and persistent uncertainty over drilling rules and fiscal terms. A recent increase in the GST rate on exploration and production inputs has further compounded these issues. This lack of investor engagement is critical for India, which relies on imports for over 85% of its oil consumption and aims to reduce this dependency. Despite actively courting foreign majors like Exxon, Chevron, BP, TotalEnergies, and Petrobras, who have signed cooperation agreements, these expressions of interest have not yet translated into concrete bids. The recurring deadline extensions, while keeping the round technically active, unequivocally signal a deep-seated hesitation and lack of confidence among potential bidders, impeding India's strategic drive for greater energy self-reliance.
