Western firms find fault with Indian oil round

By Nidhi Verma

NEW DELHI (Reuters) - Western oil firms were lukewarm about India's latest licensing round which closed on Monday, deterred by tax issues and concerns about quality of blocks on offer, top executives and officials said.

Foreign firms were put off by India's move to offer tax concessions to companies that discover oil, but no such incentive is offered for gas discoveries.

India, Asia's third-largest oil consumer, imports 70 percent of its crude and is keen to quickly tap any remaining domestic reservoirs to help offset its growing dependence on imports.

"There is no logic in having different terms for oil and gas discoveries," BP exploration director for South Asia, Jonathan Evans, told Reuters after submitting bids for two deep-water blocks in partnership with Reliance Industries .

Two days before the deadline for bids, the oil ministry declared that the difference in taxes for oil and gas finds will continue.

This created a negative sentiment for the exploration round, chairman of state-run Oil and Natural Gas Corp (ONGC.BO), R.S. Sharma, told Reuters on the sidelines of the World Petroleum Congress in Madrid.

"This clarification shows that policy makers in India do not have the basic understanding of the business," Sharma said, but added that the company had bid for 26 blocks.

BG (BG.L), which operates fields in India, Chevron (CVX.N), which has a stake in Reliance Petroleum , and Royal Dutch Shell (RDSa.L) and Italy's ENI (ENI.MI), which also has stake in a block, have not bid.