Ministry wants to monetise these fields that have remained unproductive under ONGC and OIL for a long time, as they were commercially non-viable
The Ministry of Petroleum and Natural Gas (MoPNG) has decided to monetise 67 discovered small fields surrendered by the Oil and Natural Gas Corporation (ONGC) and Oil India Company (OIL) by putting them on the block from July 15.
Dharmendra Pradhan, minister of state (Independent) for petroleum and natural gas, said the last date of submission for the bid was October 31, and the government will begin the roadshows from June 6 in Mumbai, Bengaluru and Guwahati.
The minister said the bid to operationalise the discovered fields was to increase oil and gas production in the country and to reduce dependence on imports for meeting domestic energy needs. India was looking to bring down its reliance on imports by 10% by 2022.
"We realise that course correction is the need of the hour to boost the sagging domestic oil and gas production," he said.
The ministry will invite bids for 46 contract areas, comprising of 67 discovered fields that have not been commercially developed by ONGC and OIL because of non-competitive costs and pricing.
In order to make these fields attractive for investors, the MoPNG has offered free pricing and marketing. Besides this, overseas investors have been allowed to bid on their own and the mandatory prior technical experience has also been done away with.
It has also waived off the 20% cess on crude oil production and customs duty on capital goods imported for developing these fields.
After encountering glitches in the production sharing contract (PSC) model followed in the previous attempt to offer fields to private sector companies for the exploration and development, the government has shifted to revenue sharing contract (RSC) model in the fresh round of bidding.
Under the PSC, Reliance and British Petroleum (BP) clashed with the government with the latter accusing that the oil and gas exploration companies were hoarding gas to reap higher prices in the future. The oil firms countered the accusation, saying the KGD6 basin had fallen short of production and needed more fund infusion for revival of the field.
The old method had many holes, as, under it the oil and gas exploration firms had to first recover their capital and operating expenditure before sharing the profits with the government.
The government has adopted the Rangarajan Committee's RSC model in its new oil and gas exploration policy. This allows sharing of revenues from the time the production begins on a field.
Pradhan said the contracts with the winning bidders would be signed in January 2017. After which, the businessmen or entrepreneurs would have to develop the field and begin production in three to six years, based on its type. According to him, reserves on the fields were worth Rs70,000 crore.
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