• 3 hours UK On Track To Approve Construction of “Mini” Nuclear Reactors
  • 7 hours LNG Glut To Continue Into 2020s, IEA Says
  • 9 hours Oil Nears $52 With Record OPEC Deal Compliance
  • 12 hours Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 14 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 15 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 4 days New Video Game Targets Oil Infrastructure
  • 4 days Shell Restarts Bonny Light Exports
  • 4 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 4 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 5 days Rosneft Signs $400M Deal With Kurdistan
  • 5 days Kinder Morgan Warns About Trans Mountain Delays
  • 5 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 6 days Conflicting News Spurs Doubt On Aramco IPO
  • 6 days Exxon Starts Production At New Refinery In Texas
  • 6 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 7 days VW Fails To Secure Critical Commodity For EVs
  • 7 days Enbridge Pipeline Expansion Finally Approved
  • 7 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 7 days OPEC Oil Deal Compliance Falls To 86%
Alt Text

Gold Prices Could Spike As India Resumes Imports

Gold purchases in India imploded…

Alt Text

Will Ecuador’s Mining Sector Return To Its Golden Days?

Despite the recent political problems…

The World Has Never Seen A Mining Exploration Scheme Like This

The World Has Never Seen A Mining Exploration Scheme Like This

As I’ve been discussing the last several months, reforms in India’s mining and exploration sector have been coming quickly of late.

And this week things appear to have reached a climax. With the government saying it will offer a historic licensing round for exploration tenements — under one of the most unusual sets of conditions ever seen in the global minerals business.

Local press reported Wednesday that the government has identified 100 land packages with potential for various minerals — which are now to be offered to the private sector under a “reverse auction” process. Related: Oil Companies Market Caps Crushed By Oil Crash

The details around this unique licensing regime are somewhat vague. But here’s what initial reports suggest we can expect as part of the this bid round.

Companies interested in bidding for exploration blocks will have to make a proposal for the amount of royalties from the property they will share with the government. For example, if the overall royalty on a property is 5%, the company could propose to take 2.5% and give the government an equal 2.5%.

The firm will then conduct the exploration work. If they discover a deposit, they do not own it — rather, the government will then put the deposit out for another round of bidding from companies that wish to carry out the mine development and operation. Related: Japan And Iran Could Keep a Lid On Oil Price Rally

The exploration firm thus ends up with only a royalty on the project. Which makes this sound like an unattractive proposition — except for one additional feature of these contracts.

That’s a compensation mechanism — which pays exploration firms back their expenses in the event they don’t make a discovery on their bid blocks. With these expenses reportedly to be paid from a government fund that will be set up to support exploration.

With this clause in play, it’s possible that explorers here could get a risk-free shot at making a discovery — and generating a valuable royalty in the process. A proposition that could be attractive for the right players, given India’s high-potential geology and vastly under-explored nature. Related: Fundamentals For Oil Still Bearish, But Sentiment Is Shifting

Watch to see if this auction goes ahead as early reports are suggesting. And to see who makes offers for the 100 blocks reportedly coming available.

Here’s to trying it a different way,

By Dave Forest

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News