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Oil Ministry to soon come up with policy on marginal oil and gas fields

Thursday, 21 August 2014 - 7:25am IST | Place: Mumbai | Agency: DNA

The oil ministry is planning to soon come up with a policy on marginal (small size) oil and gas fields in order to enhance production from such fields, Saurabh Chandra, secretary, petroleum and natural gas, said on Wednesday, at oil and gas convention.

"At the moment there is no policy on marginal fields. A policy should come in next two months. For example ONGC currently has 400 fields. There may be fields where with better technical expertise, with concentrated inputs, manpower and money, they can enhance production," Chandra said.

He further explained that five years ago ONGC had identified 21 such marginal fields where output could have been improved and it had also got in to service contracts. But these service contracts did not really work and hence the government now feels the need for change in policy.

Marginal fields are classified as those awarded to national companies but could not be developed due to tough terrain and low reserves after defined time periods. A good amount of hydrocarbon is locked in these fields, but they cannot produce economically on a stand-alone basis, or with a conventional approach and hence ONGC had to outsource this work to smaller companies as service contracts.

The oil secretary identified that country's oil and gas security was the government's top priority and is constantly working on how to improve exploration and production in short-to-medium term. Chandra pointed that of the 201 oil and gas discoveries so far, only 30 has been monetised, 29 has been abandoned, leaving 142 still to be monetised. The government also wants to encourage exploration of CBM and shale gas.

"On 22 (August), we will be discussing with stakeholders on how to effectively extract CBM gas," he said. The government has so far allotted 33 CBM blocks. Among these, Great Eastern Energy has undertaken production work while Reliance Industries and Essar Oil are likely to soon start production. However, still around 11 blocks are left that are not producing due to issues of micromanagement and overlapping of CBM blocks. "You cant have two different operators for CBM blocks, so there are such issues which we have to address," Chandra added.

He also recognised that several oil and gas reserves in deep waters needs to be aggressively pursued. On the upcoming Uniform Licencing Policy which will be replacing the existing New Exploration Licence Policy, Chandra suggested that bidding parameters should make operations easier for the operators, requires less micromanagement and create less issues than current production sharing contracts (PSC). The government has put up the new model for public consultation.

On Cairn India's production sharing contract extension, Chandra said that a committee headed by additional secretary financial adviser has submitted its recommendation for PSC extension and the government will examine the presentation next week. The decision could take more than a month, Chandra added. Cairn India has requested the petroleum ministry to extend PSC in the first instance till 2030, since the block had commercial production potential till 2040.

In order to get extension till 2030, Cairn India had to prove the gas potential in the block. In this connection, the ministry has also asked the Vedanta group company to submit declaration of commerciality for its gas production as soon as possible. Cairn is currently producing around 8 million cubic feet per day from its Rajasthan block which it plans to increase to 100 mmcftd by 2017. The company sees multi tcf (trillion cubic feet) potential in this block.




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