Govt asks ONGC, OIL to sell out 66 fields to pvt firms

To quickly bring all sedimentary basins under oil and gas exploration, the government dumped a two-year-old model of bidding out acreage or blocks to firms offering highest share of revenue, and brought in a new system of bidding them out on the basis of work programme such as drilling of wells and shooting of seismic with the winner’s only liability being payment of statutory duties like royalty and cess, he told reporters here.

ONGC and OIL, who are battling stagnation in output from largely ageing fields, have a total of 184 fields. The national oil companies have been asked to provide enhanced production profile for 66 of these fields, which contribute 95 per cent of the 36 million tonne of annual oil production in the country, and given freedom to induct private and foreign partners or technology providers.

They have been allowed to retain another 52 fields (49 by ONGC and 3 by OIL) where enhanced oil recovery or improved oil recovery programmes are already under implementation and they were put on production in the last four years.

For the remaining 66 fields (64 belonging to ONGC and 2 to OIL), which currently contribute about 5 per cent of total output, will be bid out or privatised with revenue share going to the two firms.

Giving details of the decisions taken by the Cabinet earlier this week, Pradhan said companies will be given pricing and marketing freedom for yet-to-be-developed discoveries and will levy a lesser royalty in case of state-owned firms raising production from existing fields.

Marketing and pricing freedom will be given to those new gas discoveries whose field development plan (FDP) or investment proposal is yet to be approved. This would apply to both state producers like ONGC and private ones like Reliance.

ONGC is sitting on two dozen discoveries which it had not been able to produce because of the current government-mandated price being less than the cost of production. Reliance also has discoveries in east coast block NEC-25 where it can produce after the new freedom.

An incentive to produce additional gas from APM or nomination fields of state-owned firms like ONGC and OIL will be given in form of royalty reduction at the rate of 10 per cent on additional production over and above business as usual (BAU) scenario, which will be approved by the upstream regulator, DGH.

Pradhan said the alongside, the government has decided to award future exploration acreage based on exploration work commitment, which will replace a two-year-old method of awarding them to companies offering the highest revenue share to the government.