The government will auction the large unmonetized oil and gas fields of state-owned ONGC and OIL to boost the country’s hydrocarbon production, Oil Minister Dharmendra Pradhan said Thursday.
Speaking on the launch of the third round of the Small Open Fields auction, he said companies cannot stay on resources they may have discovered indefinitely.
These resources actually belong to the nation and they will be monetized by offering them to interested entities, he said.
No less than 32 oil and gas blocks with 75 discoveries have been proposed in Round III of the Small Open Field (DSF). These small marginal fields were discovered by the state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), but their development was not economically viable due to the tax regime and their small size.
Under the DSF, liberal conditions, including freedom of pricing and marketing, are offered, which makes them viable.
“There will be no FSN next time. Next time it will be a ‘major’ round (large field auction),” Pradhan said.
He said the Directorate General of Hydrocarbons (DGH), the technical arm of the Petroleum Ministry, has the “full mandate” to identify the main non-monetized fields that could be offered at auction.
“Resources do not belong to a company. They belong to the nation and the government. They cannot belong to a company indefinitely. If someone cannot monetize them, we will have to put in place a new regime,” did he declare.
The statement comes weeks after his ministry said India’s largest oil and gas producer, ONGC, would sell a stake in producing oil fields such as the Ratna R-Series in the western offshore to private companies and would find foreign partners in the gas fields of the KG basin.
On April 25, the PTI presented a seven-point action plan, “ONGC Way Forward”. It was fired by the ministry which asked the company to consider a sale of a stake in maturing fields such as Panna-Mukta and Ratna and R-Series in offshore and onshore fields in the west like Gandhar in Gujarat to private companies while ceding / privatizing ‘marginal non-performing fields.
He wanted ONGC to bring in global players in the gas-rich KG-DWN-98/2 block, which is expected to increase production sharply next year, and in the recently commissioned Ashokenagar block in West Bengal. The Deendayal block in the KG basin, which the company bought from the Gujarat government company GSPC a few years ago, is also identified for this purpose.
“This ‘chalti ka naam gaddi’ attitude (something that barely works) will now work. We have to make bold decisions,” Pradhan said. “Unused and unmonetized resources, especially with state-owned enterprises, need to be monetized. For a country that imports 85 percent of its oil needs, long-unused resources cannot be authorized, he said.
“Our goal is to maximize production. So we have to look at all the options available. We cannot find ourselves in a situation where the fields have been in it for a long time and are not developed,” he said.
In DSF-III, 11 onshore blocks, 20 offshore and one deep water area are offered for auction. These blocks, spread over approximately 13,000 square kilometers, contain 75 oil and gas discoveries with a combined resource base of 230 million tonnes of oil and gas equivalent to oil.
In the two previous rounds between 2016 and 2018, 54 blocks, withdrawn from ONGC and OIL, were allocated.
According to the DGH, 29 field development plans representing $ 1.76 billion in investment have been filed.
The oil production of the zones allocated in two rounds of NTF is expected to reach 1.3 million tonnes by 2024 and gas production to reach 2.9 billion cubic meters.
The April proposal was the Oil Ministry’s third attempt to get ONGC to privatize its oil and gas fields.
In October 2017, the DGH had identified 15 producing fields with a collective reserve of 791.2 million tonnes of crude oil and 333.46 billion cubic meters of gas, to be handed over to private companies in the hope that they will improve the reference estimate and its extraction. .
A year later, as many as 149 small marginal fields of CGSBs were identified for private and foreign companies on the grounds that the public company should only focus on submissions.
The first plan failed due to strong opposition from the CGSB, sources familiar with the matter said.
The second plan went to the Council of Ministers which, on February 19, 2019, decided to cede 64 marginal fields of CGSB. But this tender received a lukewarm response, they said.
The sources added that the CGSB was allowed to keep 49 fields provided their performance was strictly monitored for three years.
CGSB produced 20.2 million tonnes of crude oil in the fiscal year ending March 31 (2020-2021), up from 20.6 million tonnes the previous year and 21.1 million tonnes in 2018- 19. It produced 21.87 billion cubic meters of gas in 2020-21, compared to 23.74 billion m3 the previous year and 24.67 billion m3 in 2018-2019.