Sept. 26 (Bloomberg) -- BP Plc and Total SA are among 34 overseas oil companies bidding to drill in India, lured by more favorable tax terms and legal certainty as explorers have contracts torn up in Russia, Bolivia, Venezuela and Chad.

India's sixth exploration offer prompted a record 165 bids on Sept. 15 because the terms are ``very attractive,'' Ian Blakeley at U.K.-based drilling consultant IHS Energy said. India will allow oil and gas producers to recover all costs before starting to tax revenue. Indonesia limits cost recovery to 80 percent, Malaysia 75 percent and Philippines 70 percent.

India is highlighting discoveries over the past four years and the rule of law to contrast with oil-producing nations that have seized output from overseas explorers. In May, Paris-based Total and London-based BP were urged by Russia to give local companies a bigger role in their ventures.

``India has put in place a good framework of policy and we are comfortable being present here,'' Sanjeev Lowe, a vice president at BP's India unit, said in an interview Sept. 15 in New Delhi. ``We've decided to bid in India because we think there is a potential for discovering oil and gas.''

Cairn Energy Plc, an Edinburgh, U.K.-based company, has found a potential 1 billion barrels of oil in western India, the company's Web site said. Reliance Industries Ltd. in 2002 made the world's largest gas find for that year, in eastern India, according to the company.

Bidders

Eni SpA, Europe's fourth-largest oil company, BG Group Plc, Petroliam Nasional Bhd., known as Petronas, Reliance Industries and Tata Petrodyne Ltd., a wholly owned unit of India's Tata Group, were among the companies that bid this year, said V.K. Sibal, director general of hydrocarbons, who offered the exploration areas.

Eni, which bid for five areas in India, on April 1 had its 50,000 barrel-a-day Dacion field seized by Venezuela's state oil company. Total, which bid for one Indian area, had its 25,000- barrel-a-day Jusepin field seized April 3 after refusing to hand over a majority stake to the state oil company. On May 1, Bolivia's government seized Total's stakes in two gas fields.

Petronas, which bid for one Indian area, said Aug. 30 Chad's government ordered the Malaysian state-run company to suspend work and leave the African nation because of a tax dispute.

India's Biggest Offer

India's biggest-ever offer of drilling rights comprised 55 onshore, deep-water and shallow-water areas. In the previous five rounds, the country offered 110 areas.

``We have transparency,'' said Sibal. ``There are legal recourses. India is a democracy.''

BP's Annual Statistical Review of World Energy for 2006 puts India's oil reserves at 5.9 billion barrels, 8 percent of Russia's total and 7.4 percent of Venezuela, reducing the likelihood that money spent on oil wells will be rewarded.

India estimates its reserves much higher. The nation may have reserves of about 240 billion barrels, of which 60 billion barrels have been discovered so far, according to Oil & Natural Gas Corp., the nation's biggest explorer.

`Risky Business'

``Globally, exploration is a risky business,'' said BP's Lowe. To limit the risk, BP is trying to find a smaller number of big finds rather than explore in any area that's available, Robert Wine, a BP spokesman, said by phone from London Sept. 15.

The worldwide search for new finds has raised costs for companies as a shortage of drilling rigs increase hiring rates. The increase ``is one of the challenges we face today,'' David Lawrence, an executive vice president for exploration at Royal Dutch Shell Plc, said on Aug. 24.

``Some deep-water-rig day rates are more than $400,000 and up, roughly three to four times what they were a couple years ago,'' he said.

India, the world's seventh-largest country, with 3.3 million square kilometers of land and 7,000 kilometers of coastline, may yield further finds because drilling by foreign companies was banned after independence from Britain in 1947. The government dismantled socialist controls in 1991, allowing the first concerted effort to promote overseas investment in the oil and gas industry to begin in 1999.

Oil-Sharing Terms

India's oil-sharing terms are more flexible than rival oil- producing nations in Asia, said Sibal, the director general. In Australia, a field operator's share is 46 percent, in New Zealand it's 56 percent and in Indonesia it's 30 percent, Sibal said in a presentation for investors. India keeps the share variable and lets competitive bids decide the share, he said.

``No one offers what we do,'' said Sibal. ``As a package, we are amongst the most competitive.''

India allows explorers to take their entire revenue from the sale of oil and gas, while Malaysia allows 87 percent, Indonesia 91 percent, the Philippines 87 percent and New Zealand 95 percent, said Sibal.

``The whole profit-oil, profit-gas and royalties regime is very attractive, to entice international companies to go into India,'' IHS's Blakeley, regional manager, Indian sub-continent, said in a telephone interview on Sept. 15. ``Some countries don't make it very attractive for foreign companies.''

IHS, which has 6,000 customers worldwide, gives regulatory and technical information to energy, defense, aerospace, construction, electronics and automotive industries.

To contact the reporters on this story: Manash Goswami in New Delhi at mgoswami@bloomberg.net; Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net.

Last Updated: September 26, 2006 03:35 EDT