It is eligible to mine and sell the petroleum if it finds any as part of the exploration process.
It will acquire fresh seismic data and drill exploration wells to establish resources and reserves of oil and/or gas in the blocks.
“The bid cost of US$551 million represents the Company’s total committed capital expenditure on the Blocks during the exploration phase and will be satisfied in cash using the Group’s existing cash resources,” it said, adding that it expects the expenditure to occur over a period of approximately three to four years.
The government will not get any money from the $551 million. However, if the company finds oil or gas and goes ahead and commercializes it, the government will get a share of the total revenue.
The company said the average (unweighted) revenue share for the Blocks shall be 33 per cent for the initial two years in the case of onshore blocks, three years in the case of shallow water blocks or five years in the case of deep and ultra deep water blocks.
“Following these initial periods, the revenue share payable to the GoI shall vary depending on the amount of revenue received,” it added.
The blocks were awarded as part of Indian Open Acreage Licensing Policy or OALP.
The OALP is the first major auction of hydrocarbon blocks to take place in India since 2010.
The company said it will enter into binding deals with the government after taking shareholder approval.
The exploration period shall consist of two phases: (i) the Initial Exploration Phase; and (ii) the Subsequent Exploration Phase.
In total, the exploration period will be a duration of six years for all Blocks, subject to any extension granted.
The production period of each contract will be a maximum of 20 years from the date of grant of the petroleum mining lease following discovery.