Bidding round for oil, gas fields opens today

Tribune News Service & Agencies

New Delhi, May 24

The government is launching the discovered small field bidding round tomorrow in which it is offering 67 discovered small fields in 46 contract areas for bidding which have known hydrocarbon discoveries.

According to a statement, the 67 discovered small fields are spread over nine sedimentary basins in on land, shallow water and deep-water areas. The prime objective is to monetise discovered fields to boost domestic oil and gas production.

These fields were discovered by the public sector oil companies and are now being offered under exclusive policy which is designed to be investor friendly and is based on easy to administer revenue-sharing contract model, in tune with the government’s policy of ‘Ease of doing Business’ in India.

India is the world’s fourth-biggest oil and gas consumer and imports nearly three-quarters of its energy requirements, but Prime Minister Narendra Modi has set a target of cutting its fuel import dependency to two-thirds by 2022 and to half by 2030. The deadline for submitting the bids is October 31, with companies free to try for more than one exploration block.

The mostly small, marginal discoveries on offer were originally controlled by two state-owned exploration companies, ONGC and Oil India Ltd. The fields have remained undeveloped for years due to their small size and the high cost of development.

The current low crude oil prices — now around $48 a barrel — will also likely make it hard for the government to attract bids for the fields.

Road shows are being planned in India and abroad to attract investors for the bidding round. More than 85 million tonnes of in-place volume of reserves are there in these contract areas. There will be a revised business model under revenue-sharing contract. It will involve international competitive bidding with no mandatory domestic participation. There is no mandatory prior technical experience required for the bidder nor is there any mandatory work programme. There will be no cess and minimal royalty is in line with earlier New Exploration Licensing Policy.

Goods and services imported for petroleum operations will be exempted from customs duty. The investors will not only get an opportunity to enter in Indian upstream market but will also experience freedom for pricing and marketing of crude and gas on arms-length basis.